"For stocks, what I see in my trading is that the lowest quality, most shorted, most leveraged balance sheet garbage stocks were rallying the most. The $BKX is up 150%, the MS cyclical index is up 100% in 10 weeks. Hysteric short squeezes in casinos, REITs, cruise ships, banks, insurers. A rotation out of junk into better balance sheet stocks during an overall sideways consolidation (we had that end of 2003/early 2004) would be bullish IMO. But so far, trash is king." Thank you! Outstanding point and absolutely true.
Topsurfi has made some great points. As to your point, eight, I do believe the S&P has a current P/E ratio of 60, which is incredibly high, which may be of interest to those who take such fundamentals into account.
Do we have any evidence that the banks were using TARP money to buy their own stock during this last rally? If so, one should expect this driving force to stop once they issue new stocks and start paying back TARP funds. If that is the case, should I say mission accomplished.
technically speaking: 950 level in the S&P is going to be a critical technical level. It must be breached with high volume however for the bull case to continue. I don't think it's going to happen. This whole rally has been on tepid volume. fundamentally speaking: Unemployment will remain high and this will crimp demand. Inflation will come roaring back with oil back near $100. I see nothing but misery ahead for the US economy. How can there be a bull case here ? I see the market going back down....and then staying there.
The following charts compare new highs minus new lows in the present period and in 2003. Would anyone like to venture an explanation for the unusual behavior seen lately? http://seekingalpha.com/article/136435-ongoing-observations-on-nyse-volume
Fantastic article that points to an incredible tank in the U.S. economy, even from these levels. Save your money. Stay liquid and defensive. A shit storm will intensify the pain for a long, long time. The stimulus money is a cruel joke; it will hardly created jobs, and has simple led to to false hopes (85% of it went to unemployment insurance, health extension payments for those laid off, and other state and local programs of limited duration): In the first weeks of Mr. Obamaâs tenure, he persuaded Congress to approve $787 billion worth of federal spending to stimulate the economy â $288 billion in tax cuts plus $499 billion to aid states and local governments. In crucial ways, this spending has already had an effect, say economists. It extended unemployment benefits and food stamps, while cutting by nearly two-thirds the amount that laid-off workers must pay to retain their health insurance. But whether it revives economic activity remains unknown. The tax cuts are only now being distributed. Only about $75 billion has been dedicated, mostly to public works projects like road-building. âThe moment of truth is coming soon,â says Mr. Zandi. âIf we donât see something real in the data by June, then I get very nervous.â Be prepared to get very nervous, Mr. Zandi. http://www.nytimes.com/2009/05/10/business/economy/10boise.html?_r=1&hpw