OH NO! – Barton Biggs Contrary Signal Warning

February 9, 2012 10:10 am

Can it be? Markets have been acting so nicely and so very cooperative. But, the last few times Mr. Biggs was quoted as increasing or decreasing his equity exposure, markets appeared to reverse course. Not that Mr. Biggs is a contrary indicator or anything.

Maybe is just coincidence or  maybe it is well timed as the reports are usually from position changes which occurred several weeks prior.

Here is a pattern we noticed:

Biggs – In, Out, In, Out (Charting the history)

Article snippets from a story via Bloomberg’s on Feb. 8th:

Stock trading around the world fell to the lowest level since at least 2006 even as global equities entered a bull market, a sign to Barton Biggs that the rally has further to go.

There was a chart presented and then:

The combined value of shares traded on the New York Stock Exchange, along with bourses in
Shanghai, Tokyo, London, Hong Kong, Toronto, Paris, Sao Paulo, Mumbai and Frankfurt. About $79 billion of shares changed hands each day on average during the past 100 days, the least since Bloomberg began compiling the data six years ago.

Could it be that buying is simply exhausted?

“There’s a huge amount of money that has been caught on the sidelines in a market that continues to creep its way higher,” Biggs, the founder of hedge fund Traxis Partners LP in New York, said in a phone interview yesterday. “I interpret it as a positive sign that not much of the potential buying power has been consumed by the advance so far.”

And now presenting the money line:

Biggs, who increased bets on stocks in December, said his net-long position in equities is currently about 70 percent. The former chief global strategist at Morgan Stanley said he favors Chinese shares and U.S. technology companies.

On the other hand, the article goes on to say:

Louise Yamada, an analyst who uses patterns in price graphs to make forecasts, said yesterday that the Nasdaq Composite Index has entered a bull market and stocks may continue to rally through the end of March. In December, she said that equity charts were signaling further losses.

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