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Since the lows back in November, the S&P500 ran up from 741 – 935 (intraday) or a gain of 27.3%.
It has since retraced half of those gains. 842 in the SPX cash is the 50% retracement of the rally off the 741 November 2008 21st low.
"My formula for success is rise early, work late and strike oil." —John Paul Getty
Consumer Credit outstanding fell $14.8b in Sept seasonally adjusted, almost $5b more than expected and marks the 11th month in the past 12 of declines. At $2.456T outstanding, it is 4.9% below the record high in July '08. After a flat reading in Aug, (didn't fall b/c of the CARS program), non revolving debt outstanding fell by $4.9B. Revolving (mostly credit cards) balances outstanding fell by $9.9B. To fully put into perspective today's data, look at the current level of consumer credit (doesn't include mortgages, the biggest chunk of consumer credit) relative to GDP. As of Q3, it totaled 17.2%...
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January 14th, 2009 at 12:15 pm
Could it be that Charlie Gasparino has been continuously speaking since the November low? Some one watching CNBC needs to grab a stop watch and get the Guinness people on the line.
January 14th, 2009 at 12:30 pm
If that was a top, it was a weird one, that’s for sure. There was no rolling plateau, just a big up followed by a big drop. Not to mention the s&p at 944 was still 20% below the SMA 200 (1180 at the time). Not even during 1929-1932 did a bear market rally peak so far away. And thus, I still think we’re heading to s&p 1080 by spring. But maybe we’re heading for a double bottom first? I hope not.
January 14th, 2009 at 12:35 pm
I forgot to mention, never in the history of the DOW has there been a crash where a rally didn’t go back up at least 50% to pre-crash levels. So assuming 1312 was the pre-crash level, and 738 was the post-crash level, that’d mean we have to go up to at least 1025…assuming history repeats. And has anyone looked at the October 1929 crash, and seen how eerily similar these two stock markets have been?
January 14th, 2009 at 12:45 pm
BR – Someone make a chart to compare the chart with 1929 please.
January 14th, 2009 at 12:52 pm
Maybe November wasn’t THE bottom.
January 14th, 2009 at 12:54 pm
@KC: And real estate never goes down in value either.
January 14th, 2009 at 1:00 pm
We’ll probably get a pop next week, as the new leader inspires the masses.
A retest of 750 is inevitable, and I would be surprised if SPX doesn’t go lower than that.
January 14th, 2009 at 1:05 pm
Here’s a semi-decent chart of the DOW august 1929- december 1929. Deja Vu.
http://www.taprofessional.de/ausgaben/Dow-Jones-Chart-daily-08-1929-12-1929.gif
January 14th, 2009 at 1:15 pm
the market has fallen by 50% how many times in history 3 maybe 4? this is not enough data to make any kind of rational comparison. retail is more involved in the stock market now than any other time in history. no one knew what a derivative as well. no SIV’s and off balance sheet garbage. to say we are going to get a 50% rally just because it happened in 1929 is a falsehood. there may be a 50% rally at some point but i would think from MUCH lower levels maybe 450-500 to 750-800 or so.
January 14th, 2009 at 1:16 pm
@harold hecuba: Not to mention consumer debt (e.g. credit cards), which was basically non-existent in those other times.
January 14th, 2009 at 1:16 pm
Looks like a retest of the 7500 level is becoming more and more likely…
January 14th, 2009 at 1:54 pm
Wave 4’s are tricky. Violent moves are the only certainty in the near future.
January 14th, 2009 at 1:56 pm
I’m not encouraged about the intermediate term prospects for the market given the sentiment models I track. The advisor and investor survey indicators aren’t so bad, but the smart/dumb money, up issues, public shorts, and Rydex/Proshares fund asset flows have been showing a bit too much optimism in previous weeks. I feel the intermediate term sentiment models need to cycle down a bit before the market finds a new base.
January 14th, 2009 at 2:00 pm
Complete bank nationalization is inevitable:
Wells Fargo & Co., the biggest U.S. bank by stock-market value, may need to raise $10 billion and cut its dividend after the acquisition of Wachovia Corp., wrote Atlantic Equities LLP analyst Richard Staite.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSUBl3u50hW4&refer=home
January 14th, 2009 at 2:10 pm
Comparison’s to the ‘29 charts? Glad I didn’t bring that up months ago
Trouble is, its a little misleading. The big rally from 29-30 started in Nov. 29, much close to the first part of the crash than we are. I got burnt a bit thinking we would do the same (no stops). My guess is we’ll have a bit more shakeout here and then have a rally when the “smart” money smells a bottom, maybe the one analogous to the one in 29-30. Then we go lower.
January 14th, 2009 at 2:18 pm
@DL: The old leader certainty does not inspire.
@venndata: CG reminds me of the chest pounding baboon attempting to draw attention to himself.
January 14th, 2009 at 2:29 pm
In the chart, there’s the trading range for 2009. Possible high of 1003 and possible low of 741. For the upside, strong resistance @ 907 & again at 936. Downside support from here is weak.
January 14th, 2009 at 2:34 pm
Citigroup is now below $5/share.
Life as we know it will cease, if they don’t get another bailout.
January 14th, 2009 at 2:37 pm
We may find that we need to make inflation adjustments to the trading range as 2009 progresses and the money supply is expanded. After a 10% slide in a very short period we seem ripe for a bounce here.
January 14th, 2009 at 3:05 pm
AT, where are you? : (
January 14th, 2009 at 3:59 pm
AT will be back with a sage pronouncement. He is probably perusing thousands of charts right this minute.
January 14th, 2009 at 4:08 pm
I see the market breaking its 6-day schneide tomorrow, but what do I know? AT? Where are you? We await for your analysis. In the meantime, getting bundled up to take the dog out into the frozen tundra. Not good times. Sparkling sunny day though! There’s my Bob Pisani/Erin Burnett/Dennis Kneale/Larry Kudlow “silver lining” and/or “mustard seeds” for you.
January 14th, 2009 at 5:07 pm
I think the ‘this time is different’ rule still applies in that our market’s behavior is still a huge ?-mark. Credit Crisis indicators are improving (see calculatedrisk), but otherwise nothing seems very typical or normal regarding this climate. Whether using fibonacci’s, pivot points, moving avgs etc – nobody has been extremely accurate…
January 14th, 2009 at 6:23 pm
Sorry guys. Would have responded to this kind of post much earlier.
Very, very ominous price action. I was getting friends out of the market at around 900 and I had been posting cautionary messages the last few days…..wish I had been wrong. I really wanted to get short at much higher levels than this….I missed A LOT of this move down. Ugh!
The action off the highs is NOT good, obviously. Circa S&P futures:
The move off the 942.50 highs to the recent levels definitely has the signature of an unfolding five wave move. We may very well get some rallies, but EVERY rally at this point is a selling opportunity. At this point I don’t think we will see 942.50 again. We will be fortunate to see 900 handle. It looks very much like the Major Degree Fourth Wave concluded at 942.50, and we are now in the beginning stages of the Final Fifth Wave down.
My current count of the “initial” Wave down.
Minor Wave 1 = 942.50 to 892
Minor Wave 2 = 892 to 915
Minor Wave 3 = 915 to 857
Minor Wave 4 = 857 to 875
Now here’s the tricky part….Because the Wave 1 was approximately equal to Wave 3, it means that the Fifth wave that started at 875 is the EXTENDING Wave, so the targets are:
822 for a Wave 5 = .618 * (Waves 1 – 3) or:
789 for a Wave 5 = Waves (1 – 3)
Interestingly the 61.8% retrace of the entire advance comes in around 817, so 817-822 is the zone that must be held tomorrow, otherwise the next step will be down to 789, which should hold. I expect some kind of support tomorrow into 817 – 822…it also corresponds with some nice support levels in terms of classical chart analysis.
It’s also interesting to note that none of the classic Fibbo retracments are providing any kind of support on this decline. This is another bit of evidence to suggest that the move down from 942.50 is it’s “own” move and not some B wave the will lead to some other C wave higher later on.
When this current “initial” leg down finishes at either 787 ish or 822 ish in the next few days, we should then get a pretty good snap back rally…maybe the last Obama Feel Good Bounce?
- AT
January 14th, 2009 at 7:37 pm
Thanks for the info, AT!