Once again, we see the 10,000 level is not worth much as support — or resistance. Its a tv talking point but little more.

As we noted back in October, we have crossed this line repeatedly — this makes the 27th or so time!

>

D10k

>

Save the hat– you’ll get more — probably a lot more — use out of them in the future!

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

52 Responses to “Put Get Those Dow 10,000 Hats Out of Storage”

  1. call me ahab says:

    “10,000 level . . . a tv talking point but little more”

    no doubt

    but really- does CNBC ever talk about anything that matters?

    kind of hard when you are peopled w/ phony corporate Wall Street shills

  2. looks like the S&P found support at its 200ema

  3. John says:

    Barry,

    The DJIA is not a valid measure of the stock market and has not been for decades. Round numbers are meaningless.

    Celebrating or lamenting a round number is silly. Celebrating or lamenting a round number on an irrelevant average is stupid.

    John

  4. As I noted above, its a tv talking point but little more.

  5. Revaluer says:

    yeah, get ready for the 28th time……..is this the smart money buying? I just read a story that ‘dumb money’ (you and me) performs its transaction at the beginning of the day, while the smartasses (barry & his folk?) do it at the end of the day.
    Do you recognise that, BR?

  6. wally says:

    How many crossings this week alone?

  7. SINGER says:

    in the words of biderman… here comes the gv’t….

  8. cognos says:

    Hey, somebody go down to storage and break out the hat box!

  9. dead hobo says:

    I can’t speak to the stock market – in fact I still believe it to be highly overvalued due to Fed pumps and stimulus dislocations- but the recession is over.

    I very recently spoke to several contacts from diverse fields. Some I hadn’t talked to in many years. All said the same thing. “Things are picking up, finally.” Nobody was jumping, the tone was relief, hope, and optimism. By active listening, you could hear “I think I’m safe and we’re building a cushion,” in each case.

    None believe government numbers. No, the numbers are not going to shout “We’re Back” any time soon. Just we’ve bottomed and might be safe.

    Next hump – 3-31-2010 end of stimulus and pumps. How will this flow through the economy? Are these optimists feeling the end of the pump or the beginning of a better place?

  10. call me ahab says:

    Wow- the market – what a show!

    DH-

    sure- that’s your contact’s impressions based on an economy that has been artificially stimulated -

    the question is- is it sustainable?

    my impression- odds are heavily against it-

    but- my other impression- the USG will be heavily involved in the economy for years and years to come

  11. dead hobo says:

    call me ahab Says:
    February 5th, 2010 at 4:10 pm

    DH-

    sure- that’s your contact’s impressions based on an economy that has been artificially stimulated -

    reply:
    ————–
    These people are in deep manufacturing and supplemental manufacturing services. All are first line people and high level enough to know the story. For them to all move in positive ways is news.

    You are right about “is it Real or is it Stimulus?” There’s no way to answer that from their impressions nor would they, or anyone else, know.

    Repeat, no bull recovery is pending. Just enough confidence to go out and spend some cash on a good Friday night.

  12. call me ahab says:

    call me ahab says-

    “the USG will be heavily involved in the economy for years and years to come”

    s0- why private ownership at all? For instance-

    why do FRE and FNM trade on the stock exchange? AIG? GMAC?

    let’s just quit fooling ourselves with these bourgeois games

  13. call me ahab says:

    “Just enough confidence to go out and spend some cash on a good Friday night.”

    I’m always up for that my friend

  14. dead hobo says:

    RE today’s market:

    I would not at all be surprised to someday discover that it didn’t fall due to a Bernanke Put.

    It’s still too high and the system is still too corrupt to put real savings into. It’s not real yet.

  15. EAR says:

    The Dow today ~3:30 – 4:00 PM EST

    http://www.youtube.com/watch?v=Ux3laLkueZk

  16. franklin411 says:

    @Ahab
    When hasn’t the government been involved in the economy? If government goes out and takes positive action to shape the economy, it produces a certain outcome. If government takes no action to shape the economy, it produces a certain outcome.

    Pretend you’re a doctor, and a patient comes in with a gunshot wound. If you operate, you save his life–your decision had an impact. If you ignore him, he dies–your decision had an impact.

    Government has been involved in economic outcomes since the beginning of time.

  17. cognos says:

    Bloomberg has a “quarterly income summary for the S&P500″ posted.

    With 315 companies reporting… income from continuing ops is $127B, a 42% increase YoY $90B.

    On a “net” basis… income for continuing ops is the same, an increase of >$200B vs a net loss of $78B YoY.

    Of course, there are still 185 companies yet to report! But I bet on a market-cap weighted basis the numbers are >80% in place. These numbers look good and the recovery has yet to really hit its stride. Cash on bal sheet is high, and credit losses continued to weigh on bank earnings in Q4. Comps look even easier for Q1, just as the numbers look likely to get better.

    Easy call. Risk/reward is skewed to the upside.

  18. Pat G. says:

    Those hats will get a lot of wear and tear this year as the DOW crosses under than back over that “magic” figure, repeatedly. Sometimes, like today, in the same trading session. Who manufacturers those hats? lol

  19. dead hobo says:

    franklin411 Says:
    February 5th, 2010 at 4:28 pm

    Government has been involved in economic outcomes since the beginning of time.

    reply:
    ————-
    Grow a brain. Your government is lying to you for your own benefit. Fuck them. If you choose to be stupid, don’t pollute the rest of us with your gullibility.

  20. Pat G. says:

    @dh

    Problem is, there are more 411s than us.

  21. supremefiction says:

    Given your post here in the NFP and what I heard you say to Dylan Ratigan this morning, Mr. Ritzholtz, the only hat you need is a dunce cap.

    ~~~

    BR: How can I possibly respond to your insightful wit, your brilliant analysis, and your iron-tight reasoning?

    Truly, you have a dizzying intellect.

  22. Cynic_FA says:

    10,000 on the Dow has absolutely no significance. Barry has pointed out the break at 1,080 SP turned everything negative. I don’t know why people are talking about 1,038 on the SP when the real conversation, if you are bearish, is:

    Are we going to 880 SP from the July lows or OMG I hope I never see 666 again.

    The Fed owns 1 1/2 trillion of mortgages and government paper to manipulate rates down. they have to unwind this and only three things can happen – two of them are bad. Does anyone, anywhere believe that the Fed can unwing 1 1/2 trillion and do it right. Got to do it right the first time cause there are no do overs.

  23. Pat G. says:

    @franklin411

    Consider this. During the last few months our NM county has tested 7K applicants for Census jobs. The report shows 9K jobs were added in the U.S. because of Census hiring. That’s 180 jobs per state. No way… Look for the numbers to get really scewered through June. The politicians will scream and shout about how this is evidence that what they did was good…so re-elect me.

  24. call me ahab says:

    Pat G-

    so . . .long Dow 10,000 hats?

    f411-

    now that I am a Zen-like god- I attempt to understand

    the question is- how much is too much?

    and my last question- is not credit destruction a necessary evil so we can spread our wings and fly once again

  25. Pat G. says:

    @ahab
    “and my last question- is not credit destruction a necessary evil so we can spread our wings and fly once again”

    I think it’s gotta happen. A clearing house so to speak.

  26. dead hobo says:

    call me ahab Says:
    February 5th, 2010 at 4:54 pm

    now that I am a Zen-like god- I attempt to understand

    reply:

    Personally, I’d rather just drink too much and get nasty.

  27. call me ahab says:

    DH-

    I gotta roll- some insane snow out here in ‘ol Virginny- so will check your response when I get home-

    but- I use to see a post or two from you at ZH-

    they do seem to break some stories- but man I grow weary of them pretty easily-

    I take them in small doses and select posts-

    your impression?

  28. dead hobo says:

    Ahab,

    ZH is a little intense, a little out there, not always spot on, but a leading indicator par excellence.

  29. franklin411 says:

    @ahab
    It seems to me that the history of government involvement since 2000 has shown that the real question is “how little is too little?” Our present disaster is entirely attributable to insufficient government intervention in private enterprise rather than the other way around.

    And no, credit destruction is not a necessary evil. The national debt as a percentage of GDP reached its highest point in American history as a result of WWII (double our current debt load). Despite this, America became the world’s only undisputed economic superpower until Reaganism destroyed our manufacturing base.

    Debt is not always bad…it’s not even usually bad. We can all agree that borrowing millions to develop a billion dollar product is smart. The question isn’t “how much borrowing?” It’s “borrowing for what?”

  30. microcap says:

    BR– OT, but in case you had not seen this I would be interested in your rebuttal.

    From A Dash of Insight

    It is only fair to note that the vocal BLS critics — people like Ritholtz, Abelson, and Mish — do not do any benchmarking of their own. They criticized the BLS and their methods for many years. When the actual data proved them to be completely wrong there was no ‘fessing up. They were wrong for many years, but still pretend otherwise.

    In the last year the BLS noted that their method (finally) broke down. Here at “A Dash” we go by data, not by any pre-conceived opinion. When the BLS was correct, we noted that. More recently we have emphasized the breakdown in their method of estimating job creation.

    The Benchmark Revisions

    I am going to state this a simply as possible. Most critics focus upon the birth/death adjustment aspect of the BLS process. They look at raw data, and ignore all of the warnings and explanations about seasonality, not adding these numbers to the monthly result, etc.

    This is a big mistake — a blunder. It would not pass muster in a peer-reviewed journal or a court case.

    So Bloomberg’s article – -nice graphics, wrong data — misses the point.

    Barry Ritholtz’s assertion about the B/D model and the business cycle is a mistake because he is asking the wrong question. Most of the implied job creation comes from the imputation step, something that he never discusses.

    Both sources err by looking only at only one part of the process — and the part that is less important — the birth/death adjustment. They are missing the “imputation step” which is much more important.

    The birth/death adjustment was never intended to capture cyclical behavior. It was a time series geared to the residual job creation after the “imputation step” did the heavy lifting, and has historically captured

    For emphasis – -and I have tried to alert many sources —

    Anyone who does not understand and discuss the “imputation step” as part of the BLS job creation process is not a true expert. You should ignore that source.

  31. call me ahab says:

    f411-

    credit deflation is happening at the consumer level- the consumer is not making any new products- they are buying the new products-

    on credit-

    that can only last so long

    regarding USG investment-

    if the USG wants to invest in high speed rail and high quality initiatives- I’m all in-

    but investing in bankrupt corporations and over-leveraged banks- count me out

  32. seana0325 says:

    Hey Barry,
    Any chance you’d like to express your thoughts on the Europe situation (greece, spain, etc…)? Is this something that could really blow up and turn out to be like another Lehmans? Or is this getting blown out of proportion?

    Im just a simple observer, trying to grasp the reality of this situation.

  33. zell says:

    Check out Calculated Risk’s look at today’s BLS #. Can’t help but think BLS is suggestive of something.

  34. call me ahab says:

    following up on zell’s CR recommendation- also this-

    “Consumer credit has declined for a record 11 straight months – and declined for 14 of the last 15 months and is now 4.8% below the peak in July 2008. It is difficult to get a robust recovery without an expansion of consumer credit – unless the recovery is built on business investment and exports

    Wow- the emphasis is mine- for f411-

    I guess that is what you are hoping for?

  35. d4winds says:

    Dow 10,000? What does the average opinion think the average opinion will think?

  36. Marcus Aurelius says:

    Hey, ahab, How ya’ handling the blizzard? Keep warm, my friend.

    As for Dow 10000, nowadays, numbers are plentiful, cheap, and of no relation to reality — they are significant of nothing. Throw some against the wall, and see what sicks. If the market had a Power Ball, maybe I’d get back in.

  37. Marcus Aurelius says:

    franklin411 Says:

    “Pretend you’re a doctor, and a patient comes in with a gunshot wound. If you operate, you save his life–your decision had an impact. If you ignore him, he dies–your decision had an impact.”
    ____________

    Now pretend that the doctor is in cahoots with the drug dealer who shot you — both of whom will benefit greatly from your demise. That is the current relationship of bankers and government.

  38. Steve Barry says:

    I find it so funny how the market rises for months on ever declining volume, then volume spikes on any downturn. Not healthy.

  39. call me ahab says:

    Marcus-

    just gone done shoveling my man- wet nasty snow this is-

    only 24″ to go- what a show!

    hey I know you delve into politics- did you see Edwards former campaign manager promoting his book about the Edwards campaign-

    wow- talk about a show- wild stuff there

  40. Marcus Aurelius says:

    ahab:

    Haven’t seen anything about the Edwards book, but I’m sure I’ll get a load of it while we’re snowed in. I’d only be interested in the political side of it, though.

    I have never had a problem w/sex in politics, except when it comes to hypocrisy (I don’t even care if a dude gets caught boffing a barely-legal teen and lies about it — that’s what an “affair” is all about, it happens all of the time, and it should surprise no one. It’s not really a scandal, it’s a spectator sport). Switzer, Edwards (to a lesser degree), and pretty much any “conservative” (read: religious right) politician (and there have been a shitload of them), caught in a sexually compromising circumstance are hypocrites (I’d love to see Spitzer set against the banks, but dude is a hypocrite who prosecuted others for behavior he himself was engaged in. Can’t trust that). I don’t care if Barney Frank fellates every gay guy he meets, as long as he’s not on the record as being against gays and/or oral sex prior to having his sex life exposed.

    Anyway, I didn’t think I’d write that much on the topic, and it’s waay OT — but I ain’t deleting it, ’cause it took too long to write.

  41. Michael says:

    ouch, one hour too soon, since it closed above 10K. keep the hat outs till options expiration week is over.

  42. call me ahab says:

    Marcus-

    no doubt-

    regarding Edwards- it’s always the cover up fantasy- politicians been lying so long they think they will never get caught-

    their’s my disgust-

    lay it on the table and let the schmoes decide- usually works out best in the end-

    at least Frank doesn’t try fool anyone- except maybe regarding his intelligence

  43. gareneau says:

    Barry,

    I haven’t read the rest of the replies here, but as I look at the chart, it appears to a technician to hold significance as both support and resistance. The fact that it’s crossed the 10,000 line 27 times is less important compared to how many times it”s hit the line and 10,000 has proved to be resistance and the times it’s proved to be support. The greater the times this has occurred the more the 10,000 line represents a significant price level. Personally, I belive these round numbers do hold significance for the “crowd”, but I confess I’ve never backtested this.

  44. I just read a story that ‘dumb money’ (you and me) performs its transaction at the beginning of the day, while the smartasses (barry & his folk?) do it at the end of the day.

    I like to buy or sell when the numbers work

  45. Moss says:

    Looks to me like the asset inflation ‘trade’ is over for the time period.
    Somebody will need to pull another rabbit out of the hat to get it going again.

    I do not think this debate has been settled yet although I suspect the inflationists are rolling over.
    Did I hear King dollar Kudlow mention ‘debt deflation’? I am sure he has no idea what that means yet he said it.

  46. torrie-amos says:

    dead hobo, agree on general b people, now the government people are the opposite, gen b NEEDS lower commodity costs and stability in those prices………..dollar has had two days of break away gaps, what will be the resolution, only the shadow knows

  47. DeDude says:

    I don’t expect the disappearance of the stimulus to have that great an impact. Its 0.4 trillion on a 14 trillion economy. A large part of the reason it stopped the free fall was psychological. You are not going to build back that same kind of armageddon panic by its removal. It may put us into a shallow second dip around election time. Dems will try to get another stimulus through but the GOPsters will block that to make sure things are worse at election time. If Dems are really smart (for a change) they will let the GOPsters do some 3 week filibusters on simple common sense stimulus proposals. That way they can shift the blame for the second dip onto the party of NO, and avoid the clobbering they are otherwise facing in November. That may cause some serious volatility in the market, although it would have only minor effects on the real economy.

  48. wunsacon says:

    DeDude, .4 / 14 is around 3%. How does the economy “feel” when it’s growing at 3% versus 0%?

    But, the impact is probably bigger than that, because the “.4″ and the “14″ are not both apples. The “.4″ in spending has no hedonics, substitution, etc. applied to it. The “14″ is extrapolated from some lower number, perhaps as low as “11″. So, we’re really talking about a 3.5% contribution.

    Speaking of which, if anyone’s new to the subject of GDP calculation and wants a great intro, navigate to this page:
    http://www.chrismartenson.com/crashcourse
    and watch the 15-minute video on “Fuzzy Numbers”.

  49. wunsacon says:

    f411,

    >> Debt is not always bad…it’s not even usually bad. We can all agree that borrowing millions to develop a billion dollar product is smart. The question isn’t “how much borrowing?” It’s “borrowing for what?”

    When you lose your job, do you keep the same level of spending even if it requires borrowing? Because that’s what we’re doing. With the bulk of the money borrowed, we’re not developing new products.

    As for the spending for WWII, that was to maintain the very existence of democracy in half the world. What are we maintaining with today’s sums? And, as for how well we did afterward, we were able to pay all that back because we built up our factories at precisely the time everyone else’s was reduced to rubble. (I expect foam-finger-wearing ‘Mericans to overlook that. But, not you.)

    I agree with the other half of what you said.

  50. THIS IS A CONTRARY INDICATOR

    Stocks Plunge Risk at Highest Since April 1984, Survey Finds
    February 03, 2010, 11:25 AM EST

    Feb. 3 (Bloomberg) — Expectations that U.S. stocks will tumble 10 percent or more rose to highest level since April 1984 this week, according to Investors Intelligence’s weekly survey of newsletter writers.

    The proportion of investment writers who anticipate a so- called correction climbed to 38.9 percent in the week ended yesterday, an increase from 36.7 percent in the period ended Jan. 27. The New Rochelle, New York-based company has tracked the projections of newsletters since 1963.

    Mohamed A. El-Erian, whose firm runs the world’s biggest mutual fund, said today that the largest stock market decline in 11 months may worsen amid persistent U.S. joblessness and economic growth that trails analysts’ forecasts.

    The Standard & Poor’s 500 Index fell 3.7 percent in January, more than any month in a year, after China set higher reserves for lenders and U.S. President Barack Obama proposed curbs on risk taking at banks. The retreat pared the S&P 500’s gain since sinking to a 12-year low in March to 59 percent.

    Investors Intelligence found that the proportion of bullish newsletter writers fell to 38.9 percent, the lowest since July, from 40 percent. Bearish publications slipped to 22.2 percent from 23.3 percent.
    Some technical analysts, who try to predict stock moves based on price and trading patterns, track investor sentiment as a contrarian indicator. They interpret decreased pessimism and increased optimism as bearish.

  51. DeDude says:

    Wunsacon, I am not saying that it is completely without effect just that those who expect that after end of stimulus we fall back to as bad or worse than before, they are going to be disappointed (poor if they invest accordingly). Before stimulus we had a negative ~6% GDP and now we have a positive ~5% GDP. If people calculate the whole darn turnaround to be stimulus money, they will underestimate the economic developments. I agree that the hedonics are a negative, but then you also have to calculate that a large portion of the 0.4T/year for 2 years stimulus were wasted on taxcuts, and they have no stimulatory effects in a financial crisis, because people and businesses use that money to reduce debt rather than spending (unless the taxcut is directly tied to spending). Let me emphasize that I am not saying we will have robust growth going forward, just that things may be better than most people here expect, even with no further stimulus.