Excellent post. I personally dont care if we rally huge or sell off huge. As long as it's volatile. And no, things dont always have to make sense. But yesterdays move off of the bottom was about as ridiculous as it gets. A busllshit rumor about the fed causes the Sp's to bounce 28 handles off of the low after a lot of bad news? Mkts wouldnt react to these rumors if the fed wasnt defending the stock mkt/bailing out wall street, which is not their job. Bring back Greenspan. Bernanke is an embarassment and nothing more than a puppet to Wall Street leaders.
I was gonna congratulate him on getting the top also. Wasn't impossible if you were in the book all morning offering em.
I think if you look at the extent of the disaster as it has already unfolded somewhat, your opinion would change a bit. Stock indexes are only indexes, they don't track every aspect of the financial world, though they do affect them (in fact, indexes being weighted towards only the largest most globalized companies is exactly the problem with them as the majority small cap companies don't participate in the meteoric rise that the indexes have). Credit markets are still very tight, the housing market is dying, the derivatives market is inflated so far beyond all the actual money in the world, the dollar is at all time lows, oil is approaching all time INFLATION ADJUSTED highs, international relations are strained, China is being pushed on and is pushing back, etc etc. IF the PPT exists (and I think we all know it does to some degree, and has probably even expanded somewhat to include international market players/regulators), their first worry is the lemming like flee from risk that occurs when the indexes fall causing a domino effect that would ripple around the world's financial markets. Why wait until the crisis is at hand when a few tens of billions of dollars can create a beautiful little double bottom on every chart - it's cheaper and easier to hide such intervention this way.
I don't know if the pop yesterday was just a garden variety short squeeze or tinkering by outside forces but it occurs to me that Ben might not want to lower rates just yet and be all the more apparent as a Wall Street patsy. It might be better to keep things up until the FOMC decision is out and then jawbone things for a while. He can come to the rescue at any time and might want to save a few bullets for later.
Time 4 the rebound I know cause I said Much higher 2 come no bad news Top stories from yahoo homepage: As of 9:48 a.m. PDT ⢠Calif. houses threatened despite slowing windsFinding clues ⢠Resident describes devastation of returning to burned home ⢠U.S. to impose new sanctions on Iran Harshest since 1979 ⢠Congress moves to put armed contractors under military control ⢠Discovery crew prepares for difficult construction work ⢠DNA scientist retires after controversial race comments ⢠Oprah Winfrey's Africa school faces abuse allegations ---------------------------- nothing serious no reason to not buy werd
The market simply isn't affected by rising oil, housing problems, subprimes, credit problems, gold, food prices, terror because none of those are a very big deal. Shorts have to realize that rising comodities, food, and such isn't inlfationary. Also, the housing bubble wasn't really a bubble nor does it have impact on consumer spending. There was no credit or liquidity crunch either. Anyone who buys into these fears is gullible and deserves to lose money. We have HUUUUUUUUUUGE consumer spending and overseas global growth. Massice credit card spending. Need credit cards. Need to buy more. Colleges packed..young people getting college education to make more money to become better consumers. People spending more money than ever. We have a new tech boom as well. An era of spending more and smartism, consumerism, spendism, and paymentism. Free trade and open borders. Tons of web 2.0 headlines. Tons of social networking headlines. An era of eternal growth, inovasion and economic stability. Economic contiumism and perpetualism.
Wow, I love how perpetual bulls can discount all reality. If the market doesn't care about all that, then why did it go negative on the year just 2 months ago? How about the financials, how great are they doing and how bright is their future? Oil prices dont matter? WHAT??? How does anything get produced, packaged, and shipped without taking into consideration energy prices? You've discounted everything and you're looking at a snapshot of TODAY without any reference for the recent past and the forseable future. Oh and I'm sure 2 fed discount rate cuts, a prime rate cut, and billions of USD and EUR poured into the market through open market operations only to have it dropping further still has no bearing either right? How far up is the S&P on the year? ~6%? How far down is the USD v Euro (or even the USD index)? ~7%? And real inflation around 3-4%? A monkey could do the math and realize that bigger numbers dont necessarily mean more value. Oh and the fed wouldn't keep cutting rates and the treasury wouldn't be asking to increase our debt limits if things were so rosey.... I do agree about tech being hot right now, but since 80% of equities move with the index, save for a few of the golden outliers (GOOG, AAPL, RIMM), even this sector is vulnerable (especially when you consider that the financial sector is their biggest customer - I felt that when I was long tech going into late July). I'm mean, it'd be great if people sleeping on the sidewalk line to get an Iphone was going to prop the US markets up, but it just doesn't work that way.