Comments on: Is the Rally Ending, or Does it Have More to Go? http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 23:28:32 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Market Talk » Blog Archive » Don’t Be The Pig That Gets Led To The Slaughter http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-217230 Market Talk » Blog Archive » Don’t Be The Pig That Gets Led To The Slaughter Sat, 19 Sep 2009 19:59:41 +0000 http://www.ritholtz.com/blog/?p=38508#comment-217230 [...] Barry Ritholtz and Mike “Mish” Shedlock debate whether this rally still has legs. Not surprisingly, [...] [...] Barry Ritholtz and Mike “Mish” Shedlock debate whether this rally still has legs. Not surprisingly, [...]

]]> By: mddwave http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-217118 mddwave Fri, 18 Sep 2009 22:00:16 +0000 http://www.ritholtz.com/blog/?p=38508#comment-217118 I regressed the gain over the last five months, the S&P 500 is going about a 40-60% rate (annual basis). I regressed the estimated S&P earnings from now until December 2010, the earnings are predicted to increase at a 25 -30 % rate (annual basis). If you believe the estimated S&P500 earnings are correct, there is more rally to go with S&P stabilizing at a 25% annual rate. If you don't believe estimated S&P500 earnings are correct and are decreasing, then rally will run until reality comes. The reality is the secondary effects of the credit crisis to dissipate throughout the economy. I regressed the gain over the last five months, the S&P 500 is going about a 40-60% rate (annual basis). I regressed the estimated S&P earnings from now until December 2010, the earnings are predicted to increase at a 25 -30 % rate (annual basis).

If you believe the estimated S&P500 earnings are correct, there is more rally to go with S&P stabilizing at a 25% annual rate.

If you don’t believe estimated S&P500 earnings are correct and are decreasing, then rally will run until reality comes. The reality is the secondary effects of the credit crisis to dissipate throughout the economy.

]]> By: JasRas http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-217085 JasRas Fri, 18 Sep 2009 19:19:58 +0000 http://www.ritholtz.com/blog/?p=38508#comment-217085 Someone mentioned volume dropping. However it is only dropping relative to where it's been in the last twelve months--which is abnormally high. If you go back further and look at total volume on the NYSE in '07 or before, you will see we are still well above "normal volume". It is certainly less the the massive volume numbers we've conditioned ourselves to lately. Rosie asks in his morning missive, "who is doing the buying"? and points to the equity mutual funds having outflows of $1.33 bln last week while bond funds had $8.2bln inflows... Corporate insiders are net sellers. Companies are not really buying back stock... He places it on program traders, short coverings and PM's trying to catch up. This is why we could still have more upside. If the retail investor (always last to the party) actually shows up and starts shifting back into equity funds, we've got more fuel to the upside. Doesn't need to be rational, logical, fundamental...just people afraid that once again they've zigged when they shoulda zagged. Like switching lines at the grocery store--whichever one you pick is the wrong one, and it will always be that way. Someone mentioned volume dropping. However it is only dropping relative to where it’s been in the last twelve months–which is abnormally high. If you go back further and look at total volume on the NYSE in ’07 or before, you will see we are still well above “normal volume”. It is certainly less the the massive volume numbers we’ve conditioned ourselves to lately.

Rosie asks in his morning missive, “who is doing the buying”? and points to the equity mutual funds having outflows of $1.33 bln last week while bond funds had $8.2bln inflows… Corporate insiders are net sellers. Companies are not really buying back stock… He places it on program traders, short coverings and PM’s trying to catch up. This is why we could still have more upside. If the retail investor (always last to the party) actually shows up and starts shifting back into equity funds, we’ve got more fuel to the upside.

Doesn’t need to be rational, logical, fundamental…just people afraid that once again they’ve zigged when they shoulda zagged. Like switching lines at the grocery store–whichever one you pick is the wrong one, and it will always be that way.

]]> By: Onlooker from Troy http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-217004 Onlooker from Troy Fri, 18 Sep 2009 17:10:28 +0000 http://www.ritholtz.com/blog/?p=38508#comment-217004 "it’s becoming a bearish eco chamber. need to hear from the other side …" You can get all that you can stand at CNBC. No scarcity of bullish talk there, especially from Cramer, I'm sure. (I can't partake; makes me nauseous as they fiddle while Rome burns) “it’s becoming a bearish eco chamber. need to hear from the other side …”

You can get all that you can stand at CNBC. No scarcity of bullish talk there, especially from Cramer, I’m sure. (I can’t partake; makes me nauseous as they fiddle while Rome burns)

]]> By: AmenRa http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216981 AmenRa Fri, 18 Sep 2009 16:44:51 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216981 Entiendo ahora. They are selling UST to keep a floor under the market as the dollar rallies. Usually with the dollar up this much the S&P is searching for new lows. My .02 Entiendo ahora. They are selling UST to keep a floor under the market as the dollar rallies. Usually with the dollar up this much the S&P is searching for new lows. My .02

]]> By: leftback http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216969 leftback Fri, 18 Sep 2009 16:29:27 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216969 “there are no signs of an impending major market top.” The market has reached a permanently high plateau. :-) “there are no signs of an impending major market top.”

The market has reached a permanently high plateau. :-)

]]> By: Friday links: valuing liquidity Abnormal Returns http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216963 Friday links: valuing liquidity Abnormal Returns Fri, 18 Sep 2009 16:18:51 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216963 [...] much more room does this rally have to run?  (Big Picture, Wall St. Cheat [...] [...] much more room does this rally have to run?  (Big Picture, Wall St. Cheat [...]

]]> By: mwm http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216958 mwm Fri, 18 Sep 2009 15:54:51 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216958 Here's some straightforward data re the econ cycle and the S&P 500. The National Bureau of Economic Research says the last recession officially ended Nov. 30 2001. Also according to the NBER the current (or recently ended?) recession began on Dec 1, 2008. So we had exactly 7 years of growth. From Nov 30, 01 to Dec 1, 08 the S&P 500 was down approximately 28%. Since the current recession was announced the S&P500 is up 31%. This is why I believe you need a methodolgy that is adaptive, flexible and rules based, focusing on what is, rather than predicated on forecasts of next quarters GDP number, company eps guidance, etc. Here’s some straightforward data re the econ cycle and the S&P 500. The National Bureau of Economic Research says the last recession officially ended Nov. 30 2001. Also according to the NBER the current (or recently ended?) recession began on Dec 1, 2008. So we had exactly 7 years of growth. From Nov 30, 01 to Dec 1, 08 the S&P 500 was down approximately 28%. Since the current recession was announced the S&P500 is up 31%.

This is why I believe you need a methodolgy that is adaptive, flexible and rules based, focusing on what is, rather than predicated on forecasts of next quarters GDP number, company eps guidance, etc.

]]> By: batmando http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216956 batmando Fri, 18 Sep 2009 15:45:04 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216956 @ jturner at 9:55 am "I think the risks are too high for individual investors to be trading on their own right now ..... So unless you can afford to pay a professional money manager with a good track record, like Barry or Mish or someone else, I’d say keep your money in cash and a little bit of gold" Couldn't agree more.., I went with Barry and Mish last October, keeping back some cash and acquiring some physical gold. @ jturner at 9:55 am
“I think the risks are too high for individual investors to be trading on their own right now ….. So unless you can afford to pay a professional money manager with a good track record, like Barry or Mish or someone else, I’d say keep your money in cash and a little bit of gold”
Couldn’t agree more.., I went with Barry and Mish last October, keeping back some cash and acquiring some physical gold.

]]> By: Vermont Trader http://www.ritholtz.com/blog/2009/09/is-the-rally-ending-or-does-it-have-more-to-go/comment-page-2/#comment-216949 Vermont Trader Fri, 18 Sep 2009 15:33:00 +0000 http://www.ritholtz.com/blog/?p=38508#comment-216949 its not about guessing... its about working hard and getting invited to the right parties :-) its not about guessing… its about working hard and getting invited to the right parties :-)

]]>