This is a Fed sponsored rally and there ain't a thing you can do about it. Feds are backing the bulls like it or not. They are ready to step in and correct any misgivings you have to short or take down the market, it ain't going to happen.
Maybe a better comparison to the current situation is 1990/1991. While markets are never the same who knows maybe it will end up being somewhat of a blueprint. 1990 saw a sharp 19% correction in the SP500 in the midst of what ended up being a widespread, worldwide housing crisis. Hundreds of banks and many homebuilding companies went bankrupt, the economy went into a recession in 1991, media headline pessimism was all over the place, oil prices doubled, Iraq War I started etc. etc. and still the SP500 gained 31% in 1991 on the belief the worst was over and this was the beginning of the end. While housing and financial markets were correcting for a long period, the SP500 gained a mere 10% from the end of 1991 to the end of 1994 while being in a very narrow 20% range with a low level of volatility. It took markets until 1995 to take off again in a meaningful way. Maybe we will see something similar now in the coming 6-18 months - a rally that eventually stalls but doesn't completely reverse but rather goes into a long narrow sideways basing period - as incoming bad news and economic softness are offset by money coming in from the side lines and short covering.
Buy, I've always felt the 13,100-13,200 level on the DOW was a good area to short. I think what the Fed has done is just delay the day of reckoning. They haven't really fixed what is wrong. And they may have dug themselves into a hole. How much more can they cut rates when we are at 2% and real returns are negative? Inflation is showing up, even in those bogus numbers. They will have to address that. I think we have at least one more downleg before this is over. But I do see your side of the argument. Good luck.
Good luck to everyone. With oil at a fresh high (even inflation adjusted) of $129+, I am more confident than ever that this market is poised to launch into the stratosphere soon. Nothing can truly dent this market; not subprime, not oil, not the credit crisis...nothing.
'Wal-Mart, Target, Best Buy, Kroger, Costco et al. are not about to tell YRCW they don't need their services anymore' they might, now that soccer mom cant afford to go shopping after filling the suv and buying groceries as far as buffet? i gues it's time for '2 minutes buffet' buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...buffet buffet buffet buffet...'the Oracle of Omaha'...
ByLo, you've made a gutsy call. You could even turn out to be correct in non-discounted dollars, as this market will be propelled upward on rampant inflation and cheap dollars. In constant dollars, however, given the current economic headwind, it is almost certain to decline (or, as Daal says, do nothing). That said, we trade in non-discounted dollars, so that's what counts on CNBC, in our trading accounts, and in politics. In real life it's the other way round. It's the progress made in discounted dollars that counts. The market is at it's 200 daily ma. Until it moves above, and stays above, we are in a bear market by my own definition, which is any thing trading below its 200 ma is in a bear market. Good trading and good luck, and i won't be surprised if your prediction turns out to be right. In the mean time i will be trading, with rare exception, on what i see, not what i think will happen.
Buyhighselllow Aren't you the guy that was calling for a crash the week of March 10? Keep sharing your thoughts.
I'd like to add one other observation, and that is that if we see anytime soon (next few years) "the biggest Rally in Stocks Since 1998," than it will be the first time in my recollection that we have had a major bull rally while entering a deep recession. But who knows, the market continues to amaze. Now saying that a big rally is coming is one thing, telling us when it is coming, another. As Galbraith said when asked if there was going to be another great crash: "definitely". The next day headlines read "Galbraith says market crash coming." Of course he avoided any mention of time, therefore assuring his prediction would be accurate.