Barron’s Magazine Cover . . .
Fascinating juxtaposition between the cover of this week’s Barron’s and the market action today: A bull, crying over the market, with the tissue box chart pointing downwards. (There were bullish articles inside, like this: America For Sale: Price Reduced)
That hit my inbox Saturday morning. Today, the Dow had its biggest single point gain ever: Dow Surges Nearly 1000 Points.
Pretty cool, no?
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UPDATE: October 13, 2008 8:10pm
Speaking of contrary indicators:
The Washingtonpost.com has launched a video series, “Hard Times,” by Emmy Award-winning producer Travis Fox, that helps to translate how the financial crisis and market turmoil are affecting individuals across the country. The series is a reflection of the economic issues that will be a top priority for citizens voting in the presidential election.
Over the next couple of weeks, Fox will travel from California to D.C. talking with people in areas hardest-hit by home foreclosures, loss of retirement funds, unemployment, the rising price of food and gas and other economic challenges.
"Hard Times is meant to be a hard-hitting, poignant series focusing on the pain, suffering and dashed hopes of people brought about by failed economic policies on Wall Street — and how this all may affect the outcome of an historic presidential contest," said Eric Pianin, Politics Editor at washingtonpost.com.
October 13th, 2008 at 4:35 pm
It doesn’t look like folks have caputilated yet if they there are look for “25 terriffic stocks to buy now”. Bummer, more down side to come
October 13th, 2008 at 4:39 pm
I requested this artwork Saturday morning, and it just showed up this afternoon . . .
October 13th, 2008 at 4:42 pm
I hope we don’t see too many more days like this one during October. (I think we may have 60 in the bag).
October 13th, 2008 at 4:47 pm
Isn’t it amazing that after centuries of market history we have only now just discovered that all we need for stocks to always go up is for our leaders to go nuclear when markets drop a ton.
In fact, markets don’t even need details or economic realities, they just need that smell of napalm coming.
Imagine all the pain that generations before us suffered simply because they had not yet discovered the magic of carpet bombing with guarantees on everything. Talk about financial innovation. Surely this is Nobel material that the old dynamite maker would have approved of. Simply magic. What a bright future that awaits us in the shining light of this blowout. Or is that the shine of gold?
October 13th, 2008 at 4:51 pm
UGH – what is that jibberish … this is what I meant to say:
If the cover is recommending “25 terrific stocks to buy now”, then not everyone has given up on the market. Hence, we are not at a bottom.
October 13th, 2008 at 4:54 pm
The wavers say it’s wave 4… so one more good down cycle after this…
October 13th, 2008 at 4:55 pm
Aren’t we overdoing everything? Society as a whole is just going through bubble after bubble and then depression after depression. Why don’t we trade on 3 years backward and 3 year forward earnings? Why do we live in this quarter to quarter world?
Barry, Please help me here. Are hedge funds even needed – where they jump from sector to sector and create bubbles? Shouldn’t we set taxes to 70% on short term trades? How else would you get people to invest for the long term???
October 13th, 2008 at 4:55 pm
Sartre and Camus must be laughing at us today:
On Thursday Roubini posted a blog titled “The world is at severe risk of a global systemic financial meltdown and a severe global depression”. He also commented that day that a crash was possible Friday or Monday. So over the weekend some people from Europe met and then issued a statement saying that they would throw paper money at the banks and guarantee new bank loans. So on Monday stock markets around the world rally 10% as people celebrate the fact that everything is going to be OK now. If the credit market and economics are that easy to control, how could we have ever gotten to the brink of a global depression!?
One day the world is on the verge of global depression and all it takes to turn it around is for some guys to get together and say, “No it’s not. We are going to throw paper money at the banks and guarantee new bank loans.” That is just incredible! I mean, if it was that easy to resolve, how the hell did we ever get to the brink of global depression in the first place? Either they should have issued such a statement weeks ago, or investors should have realized how easy it would be to resolve the problem and that the European and other leaders would eventually do the obvious easy thing and throw money everywhere. Then they wouldn’t have needed to sell stocks in a panic last week!
Biggest point loss in history and worst week in 75 years, followed immediately by the biggest point gain in history as markets conclude, “Problem solved”.
How could the market have gotten it so wrong, when the solution was so easy and obvious?
The absurdity of it all is mind numbing.
Bird and Fortune, had it exactly right.
October 13th, 2008 at 4:55 pm
I love the main stream media. Another howler: Charlie Gasparino’s article on the “Obama Panic”
http://www.nypost.com/seven/10132008/postopinion/opedcolumnists/an_obama_panic__133374.htm
Hey Charlie, Obama’s lead widened further, plus he released his economic plan, the markets loved – I love that word – it.
October 13th, 2008 at 5:05 pm
A lot of the group here are generally pessimistic but realist investors and traders.
Most of this group realized that last week when margin calls were going off right and left and the general population was negative on the entire market it would come to an end.
When the media blasts the regular Joe and Mary and forces him out of his retirement account because he fears the end is coming what a perfect time to entire the market with some spinkling of bets.
Not moving my 401K retirment account; priceless.
Steve Barry QID down 23%. That’s a good portion of that 80% gain you had. You have to cut and run on the short funds here. Although last week has probably damaged the economy the world goverenments know of the Great Depression history and are going to do anything possible to prevent that. Maybe in a month or two we will see another crash run as the economy sinks but I’m not sure. We are already 40% down. That’s tough to beat by any means.
October 13th, 2008 at 5:06 pm
As I said Saturday, this cover shows no capitulation…every headline is optimistic and there is no bear on the cover.
October 13th, 2008 at 5:08 pm
Thanks BR. Unloaded some longs today, but couldnt resist a little TWM at the close. Market continues its way of charging into the close in whatever direction its going. No late pullbacks these days. Is this a great country or what? A sidelight – beer prices were also up a record amount around here today.
October 13th, 2008 at 5:11 pm
Thank god we’re back to the normal bull market 11% up days….
October 13th, 2008 at 5:19 pm
Now Bill Gates is an expert economist. Predicting 9% unemployment:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aeJtdzVvNYk4&refer=home
October 13th, 2008 at 5:22 pm
Yes, but, and you know this, the market is like a depressive-manic. Today’s market action compared to last week’s one shows this very nicely.
My trading program told me last week to buy like crazy. I suppose my program was right. However, I expect this will be just another bear market rally to realize some nice profits and increase cash positions again to have enough liquidity for the next downward wave.
There is probably a major global recession coming, which hasn’t been fully recognized yet, with upcoming downward revisions of earning etc. Additionally, the deflation of the credit bubble, which has built up since the 1980s, just has started. There is much more to go here. We can expect that both factors will provide more downward pressure to stock prices.
There seems to be a cycle of stock prices relative to earnings, which runs over about 30 years. See
http://media.ft.com/cms/4cc062f4-cc10-11db-a661-000b5df10621.gif
The p/e minima were at values of about 7 or 8 in about 1917, 1948, 1980. If we assume we are coming to the end of such a cycle, stock prices will have to go down even significantly from here. What was the S&P500 p/e ratio on October 10, 2008? 15 or 16? And earnings haven’t been all revised down yet. Thus, there might be another 30% to 50% decrease in stock prices ahead before The Bottom will be hit some time within the next couple or three years or so.
rc
October 13th, 2008 at 5:22 pm
Is today a 9-to-1 up day, as defined by Martin Zweig, who helped to develop this indicator several decades ago.
October 13th, 2008 at 5:24 pm
Barry a serious question for you.
First thanks for the tip on friday. Right around you had posted I had independently come to the same conclusion and went 7% into SSO (unloaded shortly before market close for a very healthy gain).
I know that 300 point days only happen in bear markets (though that seems disingenuous since it would be better to post these things in actual percentags). The last time the S&P 500 jumped so much in 1 day was 1933 I think.
With literally no track record of such crazy swings (you could say that 4% up days only happen in bear markets, but you can’t really say anything about 12%), is this portending more failure, or some new paradigm?
Anyway, thank you for your objective work. It is greatly appreciated around here.
October 13th, 2008 at 5:26 pm
This was a 90% up day Barry. What did you think of the volume? Seems to fit your scenario of a bottom.
October 13th, 2008 at 5:31 pm
Dow gained 15.3% on March 15 1933.
Largest percent gain ever.
It took winning an apocalyptic World War (the first nuclear war) to justify that sentiment.
Are we doomed to repeat history?
I hope not.
October 13th, 2008 at 5:33 pm
The market can’t go straight down forever, right? I am thinking that we will see some more downside before this thing bottoms.
October 13th, 2008 at 5:47 pm
Barry, Are you secretly writing for Barron’s? No way do they get their timing this right.
Seriously though, this looks like a classic rally within a bear market. Even so, I would not be surprised if this recent low holds for some time.
October 13th, 2008 at 5:52 pm
nyse only had 86% up volume
but nasdaq had >90% up volume
http://finance.yahoo.com/advances
October 13th, 2008 at 5:53 pm
Am I the only one who thinks that Lehman’s auction last Friday was a big contributor to Friday afternoon’s and today’s positive sentiment? That was nowhere NEAR as bad as people feared, from my new and limited understanding of that whole process.
October 13th, 2008 at 6:00 pm
The ole cash and carry arbitrage is afoot by the Treasury…lead by none other than Neel KashKari.
Sorry, I couldn’t resist, and I will shut up now.
October 13th, 2008 at 6:04 pm
It seems Barry is at his best when the market is at its worst, and vice versa.
On Friday during the mania and carnage he put out a 10% buy signal.
Today, with the market rebounding, he puts up one of his silly “magazine cover indicators.”
Oh, well. I guess we should be glad for such trivialities.
October 13th, 2008 at 6:28 pm
Too far, too fast. Not that I minded
Damn puts I had hedged with deteriorated though.
Not to keep bringing up history, but this looks almost like late Oct – early Nov. 1929. I don’t have access to the DJ numbers or chart here (anyone know a good website?), but this page is interesting:
Largest DJ gains and losses
It says the second all time biggest percentage gain was on October 30, 1929 following October 28 and 29, 1929, the second and third biggest percentage down days in history. According to that page, Oct. 30, 1929 saw a bigger percentage gain than today.
A week later was another big down day on Nov. 4 and then it was down to the intermediate bottom in on November 13. The next day was up big for the start of a 50% bear market rally until it started the last slide.
This history was explained a lot better than I can by someone much mor qualified, Marc Faber, in The treacherous nature of bear market rallies.
Thus, I think were either still still not out of the very volatile area, or just starting a bear market rally. Take your pick. I tend to think the former, because, even with all the wonderful news, the UK is the only place where it’s a done deal on the bank rescues. Plus, we are heading into earnings season and some appaling numbers from someone could start a bit of a panic.
I’m gonna play it by ear and keep my trailing stops in place.
BTW, I think Bill Gates is more right than almost all the economists I’ve heard give predictions. Are they multibillionaires?
October 13th, 2008 at 6:30 pm
Actually, the crying bull on the cover is quite apropos, given that the DOW is off some 6,000 points from where it was in 2000, in inflation-adjusted dollars. Hell, he should be on the floor in a coma.
.
October 13th, 2008 at 6:48 pm
Mike in NOLa @ 6:28:09 PM
“…I don’t have access to the DJ numbers or chart here (anyone know a good website?)…”
Yahoo finance has a chart of the Dow going back to October 1928.
IMO: a lot of “to-ing and fro-ing” over the next few weeks. I remain bullish on the upcoming period 11/1/08 to 1/15/09.
October 13th, 2008 at 6:53 pm
Today was a great day for Dennis Kneale! But, of course, he remains a vacuus douche bag. so on to my point. I am waiting for this market place to get semi-rationale. Panic selling replaced by panic buying is still, uh, PANIC. So, I cut my SDS midday by 50%, which hurt, but as it turned out would’ve hurt more. I bot some dividend stuff, but not a whole lot, and then just watched for 3 or 4 hours. Oh, full disclosure, I went for high risk on the buys: HGT and PBT. They could cut the dividends to a third and they’d still be high. Let’s see if a boredom, shot in the dark trade pays off. I think it will (obviously). As I’m rambling, I may as well cut this off. I guess the third Ketel Gibson is kicking in….
Oh, hey, Cramer is on TV. Did you know he’s a frikkin’ GENIUS? ha
October 13th, 2008 at 6:56 pm
Some of us posted here last Thursday night that you need to cover on the open Friday morning because we could get a 15% rally next week. Well. We’ve done that and some from the lows.
If you’re still tied to the idea of being long stocks and you got scared last week, then it would be a great idea to let some stock go tomorrow.
I truly do not believe this was the low for the year. We will set a new one in the next several weeks. It seems hard to believe we could put in a major bottom on Friday after many huge down days….counter-trend rallies are very, very common on Fridays. Also, it’s very difficult for me to believe that the ‘confirming’ day is a Columbus Day holiday.
Also, major bottoms don’t get made because of government intervention. We likely saw the most oversold/emotional point for the duration of the bear market. The Weekly RSI became very oversold. The bottom of this market will likely be put in when we get some RSI divergence (another new low with no confirming RSI low), probably several weeks from now.
- AT
October 13th, 2008 at 6:59 pm
Short on John Borchers. Long on Steve Barry
October 13th, 2008 at 7:17 pm
I’m sure Tony Crescenzi is a nice guy, and he probably had nothing to do with it. But the subtitle to his article this afternoon is: “A massive slowdown in lending will eventually affect GDP.”
October 13th, 2008 at 7:32 pm
Brutal day for QID…but in perspective, it just gave back all of last week’s gain and on a positive note, closed a very large gap.
QID made a perfect, symmetrical 2 year long rounded bottom…the most bullish long-term chart pattern there is. It is a major reversal of trend, with slow, methodical accumulation. It is hard for me to believe that the breakout from such a pattern lasted all of 5 trading days. But anything is possible when the rules keep changing. But all the rules changes and government meddling make me want to pay less for stocks, not more. There is no free lunch.
October 13th, 2008 at 7:35 pm
buy gold futures contract for dec– take delivery of gold @ $ 839 per ounce – can sell for min$ 1000 per ounce– can buy mini contract @ comex- check gata website for details – beat them @ their own game
October 13th, 2008 at 7:53 pm
The same Barron’s who said buy GE just a couple weeks back no?
Remember please everyone… this is not the same Barron’s … this is the Rupuert Murdoch Barron’s where “news” is manipulated to favor a political agenda. Think Larry Kudlow. Such a shame but reality bites.
October 13th, 2008 at 7:54 pm
“the world goverenments know of the Great Depression history and are going to do anything possible to prevent that.”
Exactly. I’m counting on it!!
October 13th, 2008 at 8:00 pm
“Now Bill Gates is an expert economist. Predicting 9% unemployment”
and very sober commentators talking long term SPX targes in the 6’s
http://www.minyanville.com/articles/Credit-fre-fnm-mortgage-subprime-Bounce/index/a/19471
October 13th, 2008 at 8:07 pm
Is it easier to make money on the short side or the long side in a bear market?..
i can’t decide.
Yet another huge rally after a huge selloff.
The bear market continues.
Now I think we get to enjoy one of those “the market is going up on bad news” periods for a week or 2.
Rinse, lather, repeat.
October 13th, 2008 at 8:27 pm
buy gold futures contract for dec– take delivery of gold @ $ 839 per ounce – can sell for min$ 1000 per ounce– can buy mini contract @ comex- check gata website for details – beat them @ their own game
Posted by: steve | Oct 13, 2008 7:35:26 PM
yes, while the CONEX is still functioning, this is The play in PMs..
as an aside, it’s so funny(strange) that those guys–GATA, lemetropolecafe.com–have been soo Right, as in, from Au under U$D300-timeframe, and, yet, receive soo little attention/recognition…
I think we’re in the 5th inning of the Day/Night Doubleheader–pack accordingly, for the duration..
past all that: 2 Down, 2 to go!~ Way to, Rays.
October 13th, 2008 at 8:47 pm
Just like magic the fundamentals of US economy are ‘ALL OF A SUDDEN’ strong again because the guberment ( Bush speaking ) is set to buy preferred equity stakes in nine top financial institutions
Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street.
The bad news is you middle class losers are still on the hook for trillions.
Vote McSame if you want to turn America into the USSRA banana republic.
Vote Obama if you want the United States of America.
October 13th, 2008 at 8:51 pm
There are many types of perishable items:
1) Raw milk sours almost immediately, but it is still consumable if kept cold. Before the ice box, very few people had access to fresh milk, which would have been warm from the cow.
2) Real, tree ripened peaches. Can’t get ‘em except as specialty items, and only in season. They can’t be shipped and they last a week or two at most. The peaches you know ain’t peaches.
3) Real, fresh, succulent, medicinal plants. You might do coke, or shoot dope, but if you never chewed on a fresh Coca leaf, or a fresh wad of Khat, you ain’t lived. Getting these fresh is nigh impossible.
4) Today’s rally. Kiss it goodbye, if not tomorrow, very soon. This can’t last. We are still in for a hurtin’ time that so transcends any market index; this new era is set to invade your very life.
October 13th, 2008 at 8:58 pm
Barry:
You’re not suggesting that were in a “bull market” now, R U…?
I don’t want to rain on anyones parade, however we’re still below last Monday’s close and I don’t see earnings and cash flow going anywhere but down. Call me old fashioned if you will, but I don’t think that this bear market is nearly done. It may be mostly done, but it’s not nearly done.
Best regards,
Econolicious
October 13th, 2008 at 9:12 pm
Could anyone comment on how the government’s plan to take equity in several financials via preferred shares will affect the common share values?
Thanks.
October 13th, 2008 at 9:13 pm
re: It may be mostly done, but it’s not nearly done.
Could nearly signify 10 years out? 15? Jason Zweig’s article in WSJ, if only for the bear market that won’t go away graph, was instructive. This volatility is great for trades, but are we looking at Patagonia (endless flatlands) coming down the road…
October 13th, 2008 at 9:43 pm
km4,
“Socialism is indeed alive and well in America; but this is socialism for the rich…”
Has the U.S. ever had any other kind but ?
.
October 13th, 2008 at 10:26 pm
If you work on the street, you probably heard that there was talk of closing the market either Monday or Tuesday this week.
When they freak that bad, the bottom is nigh folks.
October 13th, 2008 at 10:26 pm
In case anyone is interested, Marc Faber, the original Dr. Doom, was on CNBC Asia late this afternoon dispensing his usual cheery opinions. Three clips of him and another guest are up here:
CNBC Asia Videos
The one where he gives his opinion on today’s rally is linked below. It starts off with the other guest.
Biggest One Day Rally
October 14th, 2008 at 12:08 am
hopefully things are looking up and it’s not just what’s going on in this vid (from the simpsons)
http://www.youtube.com/watch?v=T3imSKAvgmY&feature=email