Dow Slips Below 8000
By Barry Ritholtz - November 13th, 2008, 1:32PM
Macro Notes
We don’t want your help because maybe we don’t need itPeter Boockvar
While yesterday's US stock market close was poor, Asia and Europe didn't follow today as debt in Greece, Spain, Portugal, etc... rallied, their CDS narrowed and stocks bounced. The Greek finance minister said January tax revenues came in above expectations and that spending was below target for the month and said "that means the deficit reduction for January is well within what we have promised." The euro is rising in turn. Also helping is the story that Trichet is headed to the European Union leaders summit a day early in order to address Greece's problems even as the Greek finance...
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November 13th, 2008 at 1:34 pm
Bounced off the lows pretty nicely. We’ll see if it holds by the end of the day (that last hour could be interesting) but so far so good.
November 13th, 2008 at 1:36 pm
Anyone see any robins yet?
November 13th, 2008 at 1:37 pm
The Dow? Who cares about the Dow? We busted the SP lows by 10 Pts.
November 13th, 2008 at 1:38 pm
@ 1PM, the NYSE ticked -1940, i.e, more stocks last traded on a downtick than an uptick… that is a new all-time low by 300… my sell-stop washout idea in action…
November 13th, 2008 at 1:39 pm
I believe! But I still think it COULD drop down to 780.
November 13th, 2008 at 1:39 pm
I-Man Says:
November 13th, 2008 at 1:22 pm
Is this muted response and current bounce off of breaking the lows on SPX an indication that we’ve already made our “psychological low”…?
This could be a solid entry point for new longs should we pick up some volume on the buying… maybe there were a ton of buyers waiting precisely for a retest/break scenario before committing new capital to equities. That would make sense given the uncertainty surrounding the election following our last low…
Thats the only thing I can think of to describe what we’re seeing now.
November 13th, 2008 at 1:49 pm
That was not a bottom, way too little fanfare. Maybe we’ll see it tomorrow
November 13th, 2008 at 1:53 pm
one of my favorite traders just said The Hulk may be here… the green one. Do we need a reversal day, or what?!
November 13th, 2008 at 1:56 pm
“Mr. Bear” is going to try to find a way to drag some more bulls into his lair. I’d be very wary about holding any long positions overnight at this point.
November 13th, 2008 at 1:57 pm
Bounce baby, bounce! Will it last?
November 13th, 2008 at 2:03 pm
Can’t imagine any more bad news short of asteroid impact. Let’s see if the retest theory holds.
November 13th, 2008 at 2:04 pm
Ahhh… the proverbial asteroid… how did we dodge it Left?
November 13th, 2008 at 2:06 pm
history THE bottoms ignore bad news….so maybe some bad news would help elucidate the big pic.
November 13th, 2008 at 2:08 pm
That is kind of an interesting point. The S&P 500 got down to 818, which is 20 points below the previous double bottom. So the supports were broken, but we have a nice V bottom. I guess that means they canceled each other out, and it’s anyone’s guess where it goes from here.
November 13th, 2008 at 2:09 pm
I think we HAVE to reclaim 860 on SPX for this to be considered any kind of victory.
November 13th, 2008 at 2:26 pm
So, let’s see if I got this right. Continuing unemployment claims and foreclosures are up. There is more evidence that these trends will continue. The TARP has been changed to include credit cards, auto and student loans. Because the DOW “bounced” off a technical number it’s a signal to buy. How many buyers perpetuated this “buying” when this “magic number” was “tested” through automated systems. Let’s all jump on the bandwagon and declare that it’s time to buy stocks. How many people know that this is the way bottoms are tested? The whole world? Get a grip!!
November 13th, 2008 at 2:28 pm
The big buy will be next week when CPI and PPI are negative. My guess.
November 13th, 2008 at 2:28 pm
there’s no such thing as victory. the battle never ends. the only constant is change. it goes on and on and on and on.
November 13th, 2008 at 2:33 pm
Anyone else trying Google Finance only to find DIG SSO SDS , other such ETFs data two days old, not reporting today’s numbers?
November 13th, 2008 at 2:34 pm
I’ll throw in that it would add to it being a victory if the financials could participate and close higher.
November 13th, 2008 at 2:35 pm
Ah, asteroids and elbows…this isn’t over to the downside. 18 to 24 months of mortgage resets, growing unemployment and further retail saggage; if I didn’t already hold a bunch of SDS I’d buy some today. Well, I think I would. Easy for me to say since I’ve had ‘em since March.
Humorous note: Did you see our fearless leader, the guy who bought AIG, and deprivatized the banking system, extoling the virtues of American Capitalism? Priceless! Shameless! Lack of an Irony sensor or what? What a tool!
Scott in Chicago
(too lazy to fix my logged in as name, but not too lazy to type all this jumk at the end of my post. Go figure.)
November 13th, 2008 at 2:36 pm
@batmando: i sent a note to support….i think it’s because the shares now trade on NYSE Arca rather than AMEX and Google hasn’t updated its feed.
November 13th, 2008 at 2:37 pm
@Pat G: I agree that it’s absurd (a big mind game, really) but remember, don’t fight the tape. The trend is your friend (until it isn’t)…….
Nothing I hold is for the “long term” anymore. It’s purely a trader’s (a skilled trader, which I am NOT, but I digress) casino, I mean, market.
November 13th, 2008 at 2:46 pm
Rememeber $2T has to come back into the stock market. I doubt it’ll all be at one time but it will come back.
November 13th, 2008 at 2:47 pm
The S&P500 set a NEW low today. That was not a successful test. I don’t have a position in the market at all as the easy money being short is over. I do not yet have a completed five wave move from the 1008 level. We looked to have completed the Wave 3 of the final move this morning…and now we’re launching into Wave 4 of the final leg….I’ve got 890 as a lot of resistance on the Dec futures as a50% retrace of the Wave 3….so that’s going to be a big zone for bulls to clear.
I don’t chart the Dow Jones…it’s a bogus index…Look at the SP500 and Nasdaq or Russel for broader markets…
- AT
November 13th, 2008 at 2:50 pm
This rally is very suspect today. It appears the volume is higher on downticks as opposed to the upticks. It’s all a little too good to be true…
HCF
November 13th, 2008 at 2:50 pm
forgot whom i was chatting with about some choice retailers ripe for a short squeeze, i bot urbn in the 14s this morning when it went red on positive earnings. i’m guessing a minimum of another 10 million shares short need to be covered… there’s nothing more fun than a short squeeze.
November 13th, 2008 at 2:56 pm
Nice trade Karen… I like it on the next pullback.
November 13th, 2008 at 3:03 pm
Barry – My comments seem to be getting bounced or are not appearing. Any reason why?
November 13th, 2008 at 3:07 pm
Hey, we hit 8548.
If you believe in the retest thesis (of Tuesday’ s low), you are a seller.
If not, well then . . .
Just kidding.
November 13th, 2008 at 3:09 pm
It’s only 3 pm –plenty of time for a few hundred points in both directions …
November 13th, 2008 at 3:10 pm
hmph.. Just out of curiosity, at what percent gain do your take your profit? 1~1.5% for a given trade for me.
November 13th, 2008 at 3:10 pm
A lot of good traders here, but can anyone point to a valid reason to believe earnings growth will be higher than expected the next 2 years? Is this anything more than a tradeable bounce?
November 13th, 2008 at 3:11 pm
It’s all part of the wealth destruction process in my view, but I hope not. You have to laugh at all the back-slapping going on with the S+P at 870! Maria Bartiromo is actually giddy. If the market is here or higher a year from now, then we can celebrate because that would mean we’ve avoided a depression. Until then, I’ll be in my bunker. No one wants a depression, not even the mega bears.
November 13th, 2008 at 3:15 pm
Looks like it’s going to be a painfully slow slog to the bottom. Think CNBC Sucks was right when he asserted that “this crash sucks”.
November 13th, 2008 at 3:21 pm
We broke the SP intraday low and will likely close below the oct 10 close. Someone please explain how that is a successful retest????
November 13th, 2008 at 3:28 pm
GLW is also dirt cheap here. I own 3k shares in combination of long and option. Walmart said sales growth good in LCD. Insiders also bought $3M worth recently
November 13th, 2008 at 3:28 pm
SparkyJP
Here is a thought from the Fed Chairman during The Great Depression, Marriner S. Eccles:
Looking back on those years, in his 1951 memoir Beckoning Frontiers, Eccles would do his best to explain the impact he set out to make. Mass production, he noted at the outset, demands mass consumption, but people can”t afford to consume if the wealth an economy generates is concentrating at the top.
In the years leading up to the Great Depression, that concentrating was accelerating. A “giant suction pump,” charged Eccles, “had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth.”
“In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands,” Eccles observed, “the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
Sound familiar? The decade of the 1920s that Eccles describes in his 1951 memoir comes across today as eerily familiar. Then as now, the U.S. economy was floating on a sea of debt.
Then as now, inequality was hollowing out the nation. Eccles put the matter bluntly: “Had there been a better distribution of the current income from the national product ” in other words, had there been less savings by business and the higher-income groups and more income in the lower groups ” we should have had far greater stability in our economy.”
NO JOBS = NO STOCK MARKET PROFITS
This isn’t hard. Invest in your neighbors, not in your investment crapola.
November 13th, 2008 at 3:29 pm
Tomorrow should be very interesting. I don’t have enough courage to do too much, if anything at all right now. Most likely going to sit on the sidelines and watch it unfold.
November 13th, 2008 at 3:31 pm
Did anyone else actually read Barry’s linked story from the previous post? Today’s market action is a totally different flavor of bullshit. But it’s the same bullshit. Brought to you by…the good folks on Wall Street.
November 13th, 2008 at 3:34 pm
This “market” (and I use that term loosely) is clearly insane.
November 13th, 2008 at 3:37 pm
Thinking back to yesterday, this whole thing makes we wonder if the market doesn’t eat like bear and shit like a bird. The movements up are downright violent.
November 13th, 2008 at 3:38 pm
you gotta love it. SPY +10% off lows… halfway to a new bull market in 3 hours..
November 13th, 2008 at 3:39 pm
@ 10 cc
your reference is a little vague
“Did anyone else actually read Barry’s linked story from the previous post?”
could you a least give the title of Barry’s link or the URL itself?
November 13th, 2008 at 3:45 pm
VT Trader says- the only constant is change… and trading opportunities…
my toes are in the green and I can almost smell the burger…
hey Bruce you did take that bet right??
November 13th, 2008 at 3:46 pm
And Cramer said this was a false ralley at what 2:30PM? LOL
November 13th, 2008 at 3:47 pm
Wow…
I dont know what I’m more amazed at… the surge off the lows, or the fact that that piece of shit RIMM that I continue to hold for some dumb reason might even close positive.
November 13th, 2008 at 3:47 pm
Wow, Barry you are a genius! We all bow down to you. You called the rally almost to the second.
November 13th, 2008 at 3:51 pm
Ouch. I just missed the bounce on SSO. Put in a limit order at 24 and it ran away from me.
On the upside i picked up some shares of STP as a market order, and am thrilled that I didnt let that run away.
has anyone written anywhere anything meaningful about what an obama presidency means by sector or by traits (ie: if we raise the dividend rate back to regular income tax rates dividend oriented stocks may stop outperforming the S&P?) etc etc.
Id prefer something market netural, and not “OMG OBAMA WILL RAISE TAXES BAD RESULT!”
November 13th, 2008 at 3:53 pm
Cramer is a tool. We are finally seeing some selling of the long bonds today, something that JB, Karen and I have been pointing to as a necessary precondition for a more prolonged rally. That selling will produce cash that might drive a much more impressive round of buying and squeezing.
The fly in the ointment right now is tomorrow’s retail sales, but anyone who doesn’t think that will suck must have been asleep, so it may not move the market. Quite a few stocks have very substantial short positions, so we might see panic buying late tomorrow, assuming we can get past the morning’s economic data.
November 13th, 2008 at 3:53 pm
From 10:30 to 1:00 today, the bears were the geniuses. From 1:00 on, the bears were the idiots, and the bulls were the geniuses.
November 13th, 2008 at 3:54 pm
batmando,
I should have said the preceding post (to this one); “Portfolio Cover: After the Fall; and the link to Lewis’ great story about the wonderful world of Wall Street.
And why the hell does CNBC keep babbling on about the G20 Meeting? Like nobody knew they were going to meet until 1:00?
November 13th, 2008 at 3:59 pm
Sold QLD way too soon. Got in SSO and AAPL at a good point. Hedged with DXD some and boy that’s dampening my gains today. But I’ve got a feeling that we haven’t seen the last of our break through the Dow 8k barrier. We’ll retest that before this mess is over.
November 13th, 2008 at 4:03 pm
Not only have we seen some bond money come back in from the public who is starting to realize it’s not the end of the world a good amount of cash sitting on the side came back too.
November 13th, 2008 at 4:05 pm
Thanks Barry. And who can tell me why everyone here seems to be glued to, but despises CNBC?
November 13th, 2008 at 4:05 pm
Lot of chirping about the quality of this rally, but it was fairly evident well before 1 PM that institutions were picking up stocks. Whether or not this rally has any legs remains to be seen, but I wouldn’t pooh pooh what just happened, and I would imagine – given the level of disbelief here and elsewhere – this thing could run much higher over the next week.
I too believe we haven’t seen the lows, but that doesn’t mean I’m shorting into this thing.
November 13th, 2008 at 4:07 pm
I sold half of the position I had built up in DRYS, which was up about 21%. Nice. Holding on to longs in the commodity space overnight, and short the 10-year bond. Given that the stock market looks ahead 6-9 months, why not the bond market? I am looking for a move out of Treasuries and into oil, gold and stuff that we actually use.
November 13th, 2008 at 4:08 pm
I watch CNBC to look for unusual negative or positive sentiment. When they start fighting with each other and you get woe is me and the market sells down during that time you know you are getting close to the bottom.
November 13th, 2008 at 4:09 pm
I don’t get Bloomberg and am not going to resort to watching the ridiculous Fox Business Channel, so CNBC, it is (m0st of the time with the sound down or on mute).
November 13th, 2008 at 4:09 pm
I hope Steve Barry sold QID. Chances are he will never see his target.
November 13th, 2008 at 4:12 pm
I wonder how many 11% rallies there have been in the S&P. I’d guess they can be counted on one hand. Wow. I don’t think we’ve seen the ultimate bear market lows either, but this action definitely argues for higher prices in the near term. Just goes to show that bear markets are not just bull markets in reverse.
November 13th, 2008 at 4:13 pm
I and I live for reversals like this… what a show. Volume ended up nice too. This is big time. Just look at the breakdowns on the VIX, SDS, and QID daily charts…
I’d say this move gets continuation tomorrow.
I might be tilting a little bit, but it really feels like the pendulum swung today… we had every excuse to free fall, and instead we got the upside reversal on nice volume… and smoked through some likely resistance levels like we “got that dirt off ya shoulder”…
Cheers, longs.
November 13th, 2008 at 4:19 pm
@ Borchers:
You and Steve Barry need to arm wrestle.
November 13th, 2008 at 4:20 pm
Byno,
Interesting that you said “over the next week”. When I switched over to the daily chart, the first thing I noticed was that today looked like a carbon copy of 10/28. That rally lasted all of 6 days – as did the following selloff. Guess we have our bull and bear markets on a weekly basis now.
November 13th, 2008 at 4:25 pm
At 3:37 Eastern Standard Time, the National Smug Instistute issued a pre-gloat alert for all of the Eastern seaboard, parts of central U.S. and the great plains, but none for California. This was followed by a cart-in-front-of-the-horse warning from the Bureau of Suspender Thumb-Snapping, and a “Don’t count your chickens ’til they’re hatched” reminder from the Cliche’ Museum.
November 13th, 2008 at 4:27 pm
@10cc: “I don’t like cricket… I love it…”
November 13th, 2008 at 4:33 pm
Well today it’s congrats to the longs, condolences to the bears, very interesting day, it was nerve racking buying up heavy yesterday and then again at the bottom once we crossed 840, but it was rewarding. Shorts, sds and qid were closed out 3 days ago which seemed wrong today until that massive bull showed up. Holly crap this is insane.
Stock market is skitzo right now, quality stocks are being destroyed and the general indexes are seeing low to high rallies in the 10% range.
Personall outside of closing shorts I got my avg price on tck.b below 7 as well as energy, infrastructure utilities and some income trusts and sold off a good chunck into the close of anything I’d been averaging heavy into to keep my position sizes in line while lowering my purchase costs. I don’t really trade just like to short the general market, buy puts and buy/sell certain names to keep my portfolio from falling in value and keep quality names in it at all times for when the rally decides to show up. I’ll be selling until we get to 1000 and then I’ll become a buyer again at 850 or a seller again at 1100.
Anybody selling in the money puts at capitulation as a way to accumalate their long term quality portfolio?
November 13th, 2008 at 4:34 pm
@Mannwich: Cheapest way to get Fox Business, Bloomberg and CNBC, if you can live without the visuals, is XM. I can’t watch CNBC all the time (day job), but do have it on the radio all day long. They have all three plus a bunch of other news channels.
As for the bounce, today’s gain barely covers yesterday. Tomorrow will be interesting.
The G20 meeting is nothing new, but I wouldn’t want to be overly short going into it. Only “shorts” I have right now are puts on long positions. In the meantime, the IMF should do something useful that would actually help the global economy and in real terms probably cost very little: temporarily back letters of credit on shipping. If nothing else we’d know if “we can’t get letters of credit” is really just a scapegoat for “nobody wants to ship anything”.
November 13th, 2008 at 4:36 pm
PS: If nobody believes we’ve seen the lows, how much does that increase the odds that we actually have?
(I don’t believe we have either. I usually do better betting against myself).
November 13th, 2008 at 4:43 pm
@ 10 cc
Not only does the overall action remind me of 10/28 but the action today also reminds me of 4/4/00 when the Nas traded in a 600+ point range (15%) and ended the day strongly (though still down a bit). In the end, that lasted about a week as well until it broke through the 4/4 intraday low and plummeted to new lows.
In fact, run a daily chart on the Nas from 3/23/00 and overlay it on the S&P chart starting on 10/1/08 and you’ll see strikingly similar movements. I fully expect to sell the SPY calls I picked up this morning before option expiry next week…I’m guessing by mid-week if not sooner.
November 13th, 2008 at 4:47 pm
I was a buyer today but have no illusions about the mid-to-long term prospects. The world is in recession, bordering on depression – we in the U.S. will not escape this easily or cheaply.
This is more like a Pet Semetary resurrection of Goldilocks – and I wouldn’t turn my back on her if I were you.
November 13th, 2008 at 4:50 pm
Winston
Even if you’re wrong about the markets, and I’m in no way suggesting you are, I see a very bright future ahead of you as a screenplay writer.
Goldilocks and The Three Bears in:
Pet Semetary 2: The Growling
I’d pay 10.50 to see that.
November 13th, 2008 at 8:15 pm
Some good trading in the trenches –
I hope y’all made some do-re-mi today!