dsq What happens if future earnings go south? Then the market could decline without P/E going below 14, no? I am not saying I think this will happen, just pointing out a curveball to your thesis.
If you bought the SP 500 on December 17th or the next trading day, and held it for the next 10 trading days, you'd have - Positive results 80% of the time - The SP 500 would have appreciated at a rate 5 times greater than an average 10 day holding period. - The last loss for this holding period, was 1% was back in 1980, and was also the largest loss since 1942. - Results for this seasonality period are similar over the time periods of 1990 to date, and 2000 to date. This is due to year end funding of investments for various tax purposes, among other things Between these odds and the clear technical signs, you can still say "it will be different this time." But you won't last very long in this game, even if you're "right" once in a blue moon.
Estimates were dropped from a multiyear growth of double digits to single digits this year. Did the markets drop on the anticipation? Nope. One more null in the anti -logic driven market. And the operating earnings were horrible. Markets .. mostly up. Moral of story, don't bank on earnings dropping to support bear market. Not saying it won't, just that they are not a guaranteed catalyst by any means. The hoards analysts will proclaim that the drop in earnings must have heralded the bottom of the correction, and to expect an explosive comback (yeah right).
Throw all the "back testing" of any levels during any crises of the past. WORTHLESS info. Support, resistance levels of "similar" moves and times (S&L crises), yada yada yada. The Finanical Storm has only started. CDO market is just the begining, more "Credit markets to come". Housing prices have yet to truly fall, ie: The majority of Houses have shown an appreciation this year. The longer inventory sites, the heavyer toll it takes on "Housing prices" nation wide. We have not seen the true crack, as housing has not yet truly collapsed. This could take years. The dollar looks to be a good long based on Technicals. but that in and of itself is worthless. The dollar will bounce only to fall to break to lower lows. The US dollar will be put on life support only, to appease our Asian Friends. However, behind the scenes they are dumping dollars, just as the "Arab Countries" move away from trading Oil in "US Currency". The consumer is running out of "Cheap and Easy means for cash". It is only 2008, give it till 2010 when all hell truly breaks and the Financial Markets collapse. It is too early for the "end of days" in 2008. There Will be plenty of money making opportunities if you catch the right side of the "Chop", with your spurt of the moment 200 point moves, from time to time.
dtraders correct. the market never discounted the drop in e arnings we're seeing now are will see over the coming qtr's. its almost as if the market has skipped the valley and is looking ahead to the next up cycle. the last 12 months have been some of the strangest seen in decades. in any other year stocks would have collapsed 30% easy on all the problems we've seen. we've created a huge moral hazard were people don't beleive they can lose in stocks no matter how bad things get
30% collapses in the stock indices are very rare. That didn't even happen in the S&L crisis About a 20% drawdown and 6.5% yearly loss in 1990 was the worst it got, and stocks moved up briskly every other year. A little more knowledge of financial history would do some good around here...
Not as nearly so "Worthless" as buying into either the permabears or permabulls hype...The technicals are usually right, and financial history is a better guide than senseless extrapolation.
Santa Claus sucker punched a bunch of seasonality traders. And now January is always supposed to be positive because of fund inflows but there is a little problem, people are not masochists! If you have trouble paying your ARMs, why in the heck would you buy mutual funds?