Lots of news today helped to drive an overbought market downwards. SPX got shellacked, and the Dow closed near the lows of the day. Which means its time for an open thread!
Overdue correction — or the beginning of the end?
What say ye?
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Dollar depreciation leads to higher inflation and ultimately forces foreign creditors to question their rationale and indeed their sanity for continuing purchases of U.S. Treasuries." -Bill Gross
Signs continue that European markets are getting tired. The Spanish and Italian stock markets, big beneficiaries of the sharp decline in their bond yields over the past few months are falling to the lowest since Feb 1. The European bank index is at a 1 1/2 week low after earnings reports from Commerzbank and Credit Ag (RBS bouncing although reporting weaker than expected earnings) were disappointing. This market action is in spite of the German IFO business confidence figure which rose to a 7 month high coming in a touch above expectations and Italian consumer confidence which bounced more than...
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April 27th, 2010 at 7:08 pm
I really don’t know what to make of this one Barry. Part of me says that there is enough bad news to drop the hammer on the market, but part of me also says that people have been so convinced recently that we are going to have a “V-Shaped” recovery that they may just buy into this news and we actually end up by the end of the week.
April 27th, 2010 at 7:12 pm
What say me? What say ye? Now the up 75% market that the stupidos did not enter is the “overbought” market.
Are you selling, Mr. Ritholtz? Are you shorting, Mr. Ritholtz?
What say ye?
April 27th, 2010 at 7:14 pm
If the Europeans do not act boldly and quickly (the next few days) the PIIGS will all see rising spreads and a flight away from all European banks and debt. The German banks and people are diametrically opposed to all bailout money and Prime Minister Angela Merkel will suffer the same fate as Sarkozy in France without a restructuring of the Greek debt which would be a de facto default.
This drops the Euro to close to parity with the dollar and makes all exports to Europe 15 to 20% more expensive. Thus stock markets will sink in rapid order and the countries holding PIIG debt, especially the UK will be especially hard hit as UK debt problems alone are too much for them to handle.
Look to a flight to safety in U.S. bonds, a rising dollar and massive stock losses.
I’d say the Europeans got to make a 3-pointer from half court with no time on the clock…..
April 27th, 2010 at 7:18 pm
Look to China, the new bellcow. It topped out last August and is just now breaking down thru the bottom of a long sideways penant. Signs of cooler weather ahead for the global economy.
April 27th, 2010 at 7:26 pm
my read-
the beginning of a correction-
and BR- be honest- I know your fishing for ideas- although- there is nothing wrong w/ that- sometimes you get insight from the most humblest of origins-
like when the shoe shine boy at your golf course offers a stock tip-
in the detective world that’s known as a clue
April 27th, 2010 at 7:28 pm
Barry,
The S&P 500 closed all the way back where it was (drum roll, please) mid-day last Monday. Oh the horror!
Referring to your headline, it can’t be either Greece or GS that caused today’s market move. Greece has been in the news for months now, so much that even the ratings agencies have lowered their ratings to reflect the situation. It couldn’t be GS because the facts have been out for more than a week and GS was actually up on the day. Unless, of course, the financial markets are not efficient …
April 27th, 2010 at 7:35 pm
Where’s NY Senator Chuck Schumer (D) — Wall Streets’s greatest ally and friend — in all of this? You’d think while Goldman is burned at the stake, that Chuck would be screaming “murder”!!
Nope — not at all.
Chuck is on the front pages today whining about Facebook privacy violations…
Phew.
.
April 27th, 2010 at 7:41 pm
next 2 weeks or not til october it back goes to 6500…………..85% of big drops in spring or fall with fall twice that of spring…………people are creatures and affected by seasons believe me…..
April 27th, 2010 at 7:45 pm
Due to EWA 5th wave is finishing in stocks. Fibonacci Projections draw the top in 1215-1220 region. It’s possible to consolidate here some time, but next step is down to 1050 level in S&P500
April 27th, 2010 at 7:55 pm
It’s a blip…Goldman will get slapped around, and left alone. Bernie will keep pumping until the whole thing gets bigger than the last wave. We are nowhere near a crash yet, too much intervention taking place.
The S&P will correct mildly, 10-15 % at worst, then off to the races again.
April 27th, 2010 at 8:00 pm
Wake me when ZIRP ends.
April 27th, 2010 at 8:03 pm
If the employment numbers are OK on Thursday then the bulls still have the tape.
Gold and dollar both up, while oil tanked. Interesting.
April 27th, 2010 at 8:13 pm
Beginning of a correction until it isn’t. The question to me is 5% or 10%? Entering a seasonally weak period, sentiment bullish, put/call not showing panic, Vix coming off very complacent level, oh, and EVERY major prognosticator thinks this market goes to 1300-1350… (UBS, MER, GS, MORSB, RWB,…) I’m leaning toward 10% b/c it looks so easily done on Point n Figure charts of various sizes on the S&P… Small cap gets hurt worse. Lg Cap quality transitions to the lead…
Not enough retail investors have participated in this rally, “waiting for the other shoe to drop”, so that might help support it being just a correction… Fed is accommodating still. People like Jeremy Grantham are still pragmatic to recognize that the market could extend way into the “expensive” range, with it isn’t—at least not in high quality stocks… D Rosenberg is starting to foam at the mouth…
April 27th, 2010 at 8:15 pm
H Meisler noted this monday was only the third monday since the Feb low that was down. Change is in the air…
Today was Very high volume for a non-expiration day.
April 27th, 2010 at 8:17 pm
Up, Down, Sideways–maybe, we can remember that We Know this:
“Just as the major banks report super earnings, Richard Koo issues his report on their condition. If banks were required to keep honest books and mark their assets to market, there would be no earnings and both the finance and real estate industries would collapse.
As described by Zerohedge:
Richard Koo’s latest observations on the US economy are as always, a must read. The critical observation from the Nomura economist explains why the realists and the naive idealists are at greater odds than ever before: the government continues to perpetuate, endorse and legalize accounting fraud in the hope that covering everything up under the rug will rekindle animal spirits. The truth, as Koo points out, is that were the FASB to show the real sad state of affairs, the two core industries in the US – finance and real estate, would be bankrupt. “If US authorities were to require banks to mark their commercial real estate loans to market today, lending to this sector would be extinguished, triggering a chain of bankruptcies as borrowers became unable to roll over their debt.” In other news Citi, Bank of America, and Wells just reported fantastic earnings beats on the heels of reduced credit loss provisions. Nothing on the conference call mentioned the fact that all would be bankrupt if there was an ounce of integrity left in financial reporting, and that every firm is committing FASB-complicit 10(b)-5 fraud. One day, just like Goldman’s mortgage follies, all this will be the subject of epic lawsuits. But not yet. There is some more money to be stolen from the middle class first, by these very firms…”
http://www.economicnoise.com/2010/04/22/government-and-banks-complicit-in-fraud/
Bear, Bulls, and PIIGS–against this backdrop, players, still on the stage, are asking to get lit up..
April 27th, 2010 at 8:20 pm
1) BR, I saw a clip of you on BloomieTV with Deidre Bolton and a guy with nicely combed hair. I believe that she introduced you as Barry ‘Reinholtz’ or something to that effect. Neither did the error register on your face nor did you correct on air. That is class. Very gentlemanly of you. We all make mistakes; it isn’t necessary to rub one’s face in them…particularly those with an absence of ‘mala fe’.
2) The end? If only we were so lucky. Reflation introduces a risk element that is extremely difficult to manage. The initial stage is easy…if you pump enough juice into the corpse it will samba like a true ‘flagra’ but come Ash Wednesday, people will be ruing ‘na rua’.
3) Flipping cable news caught the tail end of some Cafferty comment about investing an extra 10000 in the market. Ummm. I would rather buy 16 hectares in Chilca, Peru.
April 27th, 2010 at 8:20 pm
but but there is no crises in Greece:
http://www.bild.de/BILD/news/bild-english/world-news/2010/04/26/bild-with-the-broke-greeks/what-crisis-business-as-usual-in-greece.html
April 27th, 2010 at 8:21 pm
As long as no one calls in the loans, How To Get Rich On OTM is Uncles Sam’s nightstand reading material. $0.39 of every dollar spent by the U.S. each dat is borrowed. If we can get this to 100% we can throw a hell of a party – for a while.
Correction or cops raiding the party is dependent on future cost of money. When will the pump run dry? Who knows? Did vandals take the handle?
April 27th, 2010 at 8:22 pm
corrrection: day rather than dat
April 27th, 2010 at 8:22 pm
The GREED-O-METER has not reached maximum overdrive yet. I said a while back based on your chart selections that we are:
Economic Cycle – Early to Middle Expansion (More toward middle)
Market Emotional Cycle – Somewhere between Thrill and Excitement
The Clock – Just about 10:15
The Chart – Drat’ i’ll buy it again. Its Cheaper than the last time anyhow!
Sentiment Cycle – Returning Confidence -everyone else enters the market
Speculator Emotional Cycle – GREEN – Greed, want more, pleasure, buy! buy! buy!
Although I think this may be the first crack in the concrete… but still a buying opportunity for anyone missing the boat so far… GREED IS GOOD!!!!
My target is the SP500 should reach 1250 shortly and top somewhere around 1350 1380 and then it starts to get dangerous….
April 27th, 2010 at 8:25 pm
Greece will get the package agreement by the weekend. I don’t know how easy it will be to implement it but the money should start rolling by mid-May the latest – even before Mrs Merkel’s election day of May 9. Let’s see if there is a bail-out rally of some sort before calling the return of mama-Bear…
April 27th, 2010 at 8:27 pm
You keep hearing that the last time we had a rally like this (70% plus) was 1933. Yes the dow went from 50 or so to 110 (see here : http://www.sharelynx.com/chartsfixed/USDJIND1930.gif). You can also see on the first serious pullback it went from 110 to 90. Near 20%
So maybe we get this time a 18% to 25% pullback, so 1600 to 2800 dow points maybe.
BUT you can bet BEN will print 24 hours a day to stop it getting too low…
April 27th, 2010 at 8:31 pm
I made good $money trading it today, what the market does next is an unknown, but anyone with a brain and some capital can speculate on what direction they think it will go and play that hand.
Sure seems messy right now, and the mood is wrong for big gains till confidence comes back, if it really does…
April 27th, 2010 at 8:32 pm
Why do I think the top is in? Well the odds are better, now, that this May will truly be a traditional May for stocks. The market is way overbought. There is an emerging disconnect again between the blogisphere and the MSM which is now almost unanimously bullish while the traditional blogger pundits warn of sovereign debt contagion, unemployment, undiminished private debt and lack of financial reform. But most of all sooner or later there will be a revenge of the savers. They will insist on reasonable returns or they will buy gold.
April 27th, 2010 at 8:33 pm
PS my top calling record is about as good as Bernanki’s bubble calling record.
April 27th, 2010 at 8:45 pm
Can you tell me what the consequences of the Euro falling real low will be?
then I might have an opinion…
Because I don’t see any will or ideas on how to fix this mess in the Euro-zone, everyone’s broke for God’s sakes.
April 27th, 2010 at 8:45 pm
Ah, don’t worry.
The 401k stuck it’s head above one of those magic triple 0 numbers, got scared, hyperventilated and slipped down to where it was more comfortable. It does that when it crosses one of those magic numbers, I’ll give y’all a heads up next time.
Jack
April 27th, 2010 at 8:51 pm
S&P has awaken from its coma and has downgraded Greece causing an ovedue selloff to an overbought market. The pendulum always swings too far in both directions. S& P wants to be proactive here, but could be overreacting. Once bitten twice shy investors are skittish. This could pass quickly but I, like most will be watching close and looking to protect gains if this gets real legs…
April 27th, 2010 at 8:56 pm
Not sure that Greece is/will be the catalyst. But the most under-reported story of the past week or so is China. The Shanghai market is down 8 out of the last 9 days. Decline is on the order of 8+%. Used to be that such a development would matter, but so far I don’t think I’ve seen a single MSM story on the subject. Nor a peep out of Barry on the subject for that matter.
April 27th, 2010 at 9:08 pm
I can say with confidence, dip buyers were very much absent the past two days.
Though we saw huge volume today I have a hard time believing much of this wasn’t telegraphed.
Regardless, odds certainly favor a drop down to 1156′ish range. Any prognosticating beyond that is beyond my ability.
April 27th, 2010 at 9:15 pm
Probably a rally back up to 1205 (or thereabouts) before a 10% correction sets in.
April 27th, 2010 at 9:34 pm
A weak Euro is another nail in the coffin of Obama’s export dream. This makes US protectionism much more likely and a breakdown of international trade a stronger possibility.
April 27th, 2010 at 9:35 pm
Shanghai is down because people are worried the PRC is taking away the punch bowl. That’s all ‘markets’ care about now.
April 27th, 2010 at 9:38 pm
The correction has been waiting for financial reform to hit the floor of the senate so there could be proper correlation in the media meme.
Would have happened a few months back but healthcare took so damn long!
April 27th, 2010 at 9:42 pm
What’s happening with Greece is a bad omen. What happens from here in the short term depends on what the EU does. The odds are that the politicians will respond to the fear of what happens if Greece defaults even though the market will then move onto Portugal and so on soon enough. If so, then it’s on to new highs before long although the rally won’t last because there are too many other countries and municipalities with brewing problems.
The chance that Greece will devalue and renegotiate it’s debt has finally been priced into it’s debt. A negotiated default backed by the EU and IMF would be ugly(down another 7%). What really matters is where this is all ultimately headed: the western world simply can not carry so much debt, promise massive entitlements, and run large never ending deficits. I don’t see us growing out of our debt burden. Debt will need to be written off and that won’t be pretty. We can argue about the path of the stock market, but it won’t be pretty.
Barry, the AAII sentiment numbers were looking rather bearish(too much bullishness vs bearishness) last week. Yesterday you said you would provide a sentiment chart or something like that that might dispel the notion that investors were overly bullish…I can’t remember how you phrased it. Did I miss the chart?
April 27th, 2010 at 9:44 pm
The +15 point move in gold today when the euro dropped -2.35 points screams flight to safety. The drop in the US equity market is just a footnote. In the 2008 collapse, bonds did well – nobody had any sense that sovereign defaults could happen, while gold dropped 25%. We’re seeing a bit of a sea change now, I believe. Bonds went up, but gold went up more.
A flurry of sovereign defaults are guaranteed to happen in the short to medium term, although they are just now starting to be priced into the market. This is because we will not be able to “grow our way out” of the trouble, since real GDP growth will be limited by a lack of growth in energy production.
Unserviceable debt must be defaulted on, period, and if you’re a reader of history, you know that those in power will deny this right up until the day they pull the trigger and give their bondholders a 50% haircut – or their currency a 40% devaluation – or decide unilaterally to lengthen maturity from 3 months to 7 years. Most of the major western powers did this in 1931-1934.
Impeding this particular bailout are the citizens of Germany, who would murder any German politician at the polls who would dare to throw any money down what is seen as the Greek rathole. I would not be a buyer of 2 year Greek debt at 17%, not with the German state elections 12 days away.
A rash of sovereign defaults will likely cause another banking crisis but this time around, given the absurd bonuses paid out by US bankers in 1Q 2010, it is likely that no further bailouts will be forthcoming.
Long gold, short financials. :)
April 27th, 2010 at 9:49 pm
Looks just like Jan 29th, Oct 29th. Play hard out of the month-end, pull off the shorts, lever into longs… even more so if its 1150 (wow! would be nice!).
See my prior post from Mar 1… target was 1220 on SPX correction to 1150… up to 1300.
By middle of next month were 1/2 way through a Q2 that will easily beat $21/shr on SPX earnings. Trailing 4-q EPS will be above $70, fwd will be $90. NFP will be awesome next 3 months. All economic indicators continue to improve. At $80/shr SPX run rate and 16.4x avg multiple, market prices 1,312 pretty easy.
Watch for companies saying… “Q2 is already coming in strong”. We had alot of those in Q1 (F, CSCO, MCD, UPS, HPQ, AAPL). As we get deeper into earnings that is a key tell.
April 27th, 2010 at 9:50 pm
Barry. Dude.
It’s pretty simple. The 61.8% retrace of the entire decline comes in at 1229. The technical sell orders were built up in front of, and just above, that level. It should not come as a surprise that the market is “discovering” resistance in front of this zone. So far, we’ve peaked at 1220? A mere .7% away from a major technical objective for many people…
April 27th, 2010 at 9:57 pm
Andy T – dshort covered it this morning
http://www.dshort.com/articles/2010/index-update-100427.html
April 27th, 2010 at 9:58 pm
The beginning of the end. If we don’t stop here at the 62% retracement that means we’re going back to test the 2007 highs. Does that make any sense whatsoever? Even if you’re mentally retarded and believe everything you hear on CNBC you have to admit things are just a little different now than back during the housing boom.
We are in a BEAR MARKET RALLY people. I predict a correction here then back up to form a double top, then down we go. Unless, depending on how fast Europe falls apart we could forget the double top and head straight down from here.
April 27th, 2010 at 10:01 pm
If Europe does not bail out Greece, Europe loses. If Europe bails out Greece, Europe loses.
The thing is, this didn’t suddenly get that way. It has been plainly telegraphed for a long, long time. Smoke and mirrors disguise situations but they do not change them.
There is a lot of reality yet to be asserting itself right here in the good old US of A, too. Everybody wants to believe that we bought our way out of a major credit collapse and that it was a one-time, short-term event. People thought similar things in 1933, too.
April 27th, 2010 at 10:04 pm
The fake hundreds of billions–> trillions the FED created and the member banks have held close to the vest to mask their collective bankruptcies (ZIRP means citizen’s real savings are worth nothing) are doing Zorch to help small business, the agents of change in the economy. With this in mind, the fact that cannot be ignored is that debt inexorably needs to be paid with no real economic income-growth. Deflation is the only result of these mathematical vectors and it is ready to catch fire like the Santa Ana winds in the desert.
The market drop can equal the 19P2 capitulation where we get the white light experience, and get Real thereafter. Shock doctrine shows panics are smoke and mirrors to let the well-connected recapture the assets they hadn’t collected previously. This is just History; it’s no mystery.
April 27th, 2010 at 10:11 pm
@wally-f Europe does not bail out Greece, Europe loses. If Europe bails out Greece, Europe loses.
In itself, Greece is a pimple on the EU arse, however what is signifies is a commitment to the EU concept. If Greece is forsaken, then who is next? Do the EU mean anything, then? And what of the currency? Greece is nothing. The actions taken, however, mean a lot and will shape the future of the EU…(maybe that is too dramatic) Europe has a history of failed unions, so it would not be surprising to see the EU ultimately fail, but it would likely weaken all the participating economies to some degree..
There is little doubt that they were foolish and just trying to get mass when the allowed Greece and a couple others into the fold, but once the commitment has been made…
What would we think if the U.S. threw out an individual state rather than bail it out? What would the world think?
April 27th, 2010 at 10:13 pm
Barry, I read you, CR, Mish, Minyanville, Naked Capitalism and others, including an elliott waver named daneric or something. Here are 4 or 5 reasons that this is a correction minimum, or possibly more.
Bill at Calculated Risk doesn’t publicize trades. The only thing I’ve ever seen him announce was a buy on the market shortly after 3/9/09. Recently (last week) he’s hinted that the market seems fully valued. Hinted, nothing more. But this from one of the most balanced sources of information I’ve EVER read.
Daneric notes that the Dow seems to have hit the 61.8% retrace plus 6 extra points earlier this week. Daneric absolutely refused to get painted into a corner calling a top in advance the past few months, and now says either this week was P2 or he couldn’t explain the chart at all. Daneric also points out that yesterday the new highs on the Dow was the highest number since 1991. This guy is not a Wall Street pro as far as I can tell, but these observations seem relevant.
Than we have the massive imbalances in sentiment the past few weeks, from Put/Call ratios, VIX complacency, investor sentiment polls, you name it.
Fourth, others are pointing out that this “recovery” is based largely on huge deficit spending to prop up GDP, and the ability of this to succeed over the long term is called into question by the Japanese experience for 20 years, or by the recent European events. Is it possible that Bernanke and Geithner recognize the limits of indefinite deficit spending and/or monetization?
Finally, every talking head is spouting off on CNBC about recovery, in the midst of a 10% unemployment rate and massive looming state and local layoffs this summer and beyond.
So technicals reached the Fib marker after a relentless steep march since February, sentiment indicators reached required extremes, and the realistic outlook is bleak almost beyond words.
Put me in as guessing! the top earlier this week.
I think quite a few professional technical types will wait for confirmation before making any such guess.
April 27th, 2010 at 10:15 pm
Recovery continues to be massively under-appreciated.
Low rates stimulate with a long lag… thats hitting right now (and rates are going no where).
Lots of positive catalysts next few months… you guys are really (really!) still clinging to the “double dip”?
April 27th, 2010 at 10:21 pm
Big relief rally after Germans relent when they understand it’s really their own banks they’re bailing out and esp. since the US is stupid enough to throw the first $15B down a black hole via the IMF. Of course, all the money only delays the inevitable as the Greeks are no more capable of self discipline than Americans are.
All the turkeys will think the nice man with the hatchet is coming to feed them like he does every day and they will buy, buy, buy just like Cramer tells them to.
Speaking of which, there’s an alert here for ya, cognos: http://www.theregister.co.uk/2010/04/26/ipad_backdoor/
April 27th, 2010 at 10:22 pm
@Rightline. Yeah, we’ve been covering this point and waiting for this point for several weeks now in the lesser known reaches of the blogosphere….
http://traders-anonymous.blogspot.com/2010/04/s-500-with-some-sugar-on-top.html
It’s actually quite rare for countertrend rallies to reverse near exact 61.8% retraces, but on the “first go,” it’s always good for a little bit of resistance.
April 27th, 2010 at 10:29 pm
One more comment. The USD is a currency. Inside the US are a bunch of states and municipalities. Individual municipalities inside the US can go bankrupt, without invaliding USD the currency. Presumably, US states can as well.
Greece defaulting won’t kill off the Euro. It just says that Greece borrowed more money than it can repay. It says that lenders need to pay attention to overall indebtedness of individual borrowers. It may also presage a default of individual states in the US, too.
April 27th, 2010 at 10:30 pm
“In itself, Greece is a pimple on the EU arse, however what is signifies is a commitment to the EU concept.”
That is simply not so. What commitment do you think Greece is making to the idea of the EU? One-sided contracts are not contracts.
April 27th, 2010 at 10:54 pm
cognos,
Let’s see whether these prediction by you materialize as well as your predictions about the number of bank failures for March and then for April again.
Only in your fantasy land.
How many more times are you going to repeat this lie that 16.4 was the “avg. multiple”?
April 27th, 2010 at 10:57 pm
The dawdling by the Germans to bail out Greece will push the other PIIGS closer to the precipice and leave them facing a mammoth bailout, of course it’s not the Germans alone but they have the most skin in the game. Should Germans sacrifice so Greek civil servants don’t have to? Will riots in Greece dictate German financial policy? Big demos in Greece could backfire and harden German reluctance to play sugar daddy.
Lots of stuff swirling around now.
April 27th, 2010 at 10:58 pm
From the Guardian live-blogging the Goldman Senate hearing today :
Goldman’s Josh Birnbaum says “I did socialise my thoughts with some people.”
The Guardian’s Richard Adams asks
“Can we run a Turing test on Birnbaum? I’m not sure he’d pass as human, based on today’s performance.”
http://www.guardian.co.uk/business/richard-adams-blog/2010/apr/27/goldman-sachs-senate-hearing-live-blog
@1:45pm
April 27th, 2010 at 10:58 pm
wally – surely you didn’t mean 1933. By 1933 the bottom in both the stock market and the economy had finally been reached. It was in spring 1930 that many thought a 50% re-trace of the ’29 crash meant it was all over and a year later many thought “prosperity was right around the corner” and then came Creditanstalt and then in early 1932 came the suicide of Ivar Krueger (imagine if Warren Buffett was found dead of a self-inflicted gunshot wound and was then found out to have been another Bernie Madoff and you’ll have some idea of the impact of the death of the now almost completely forgotten Krueger).
There were actually numerous >20% rallies from spring 1930 to the eventual bottom and each time the end of the bear market was called by many.
This bear market rally will end too. Whether or not yesterday was “the” top is only of interest to those foolish enough to be trying to trade a once in lifetime global financial crisis. Look at a chart of the Dow from spring 1930 to spring 1933 or the Nikkei from 1990 to today and try to imagine how many traders were able to successfully navigate those roller coasters. I wish Barry all the luck in the world.
April 27th, 2010 at 11:05 pm
Two 90% down days in two weeks is a negative sign. But there are many positive signs (technically and earnings wise).
If small caps under perform, this correction will be real. So far small caps are doing great. They didn’t even break 20 day average.
Even though I want a 10-15% correction, 0% fed will not allow that. So, buy in 2 weeks and close your eyes and ears too.
April 27th, 2010 at 11:08 pm
The saying goes “The trend is your friend.” The smart money adds ” ‘cept the bend at the end.”
Are we started to bend it like beckham in here?
http://www.ritholtz.com/blog/2010/03/im-rapidly-losing-faith-in-this-whole-game/
and don’t forget the 61.8% Fibonacci retracement wave at 11,241!
http://broadcast.ino.com/education/dowsp500415/
April 27th, 2010 at 11:25 pm
ZIRP might be just a can of fix-a-flat for the economy to buy time until we can replace the old flat and get back on the road. But as long as ZIRP is working it’s magic, I think it’s crazy to short this market.
What I’d really like to know is how much value investing people are doing right now.
April 27th, 2010 at 11:25 pm
1120-1225 is near the .618 retracement of a high of 1565 and the 3/9/09 low of 676. I’d say 1219.80 is then end of leg 2, and for a long wave wayyyy down.
BR, any updated annotated Elliot wave charts available for the guru?
April 27th, 2010 at 11:42 pm
Bush’s last laugh here we come. 7 months ’till higher taxes.
I have no opinion other than on the fact that Barry will have to hear Bush’s name brandied about through the election and new year (can’t we just move on). We can only measure the impact after the fact. That is if we don’t causorrelate incorrectly then too.
April 27th, 2010 at 11:44 pm
What say me?
You know where I stand;
At the bottom of the page, waiting patiently for the Dow to hit 3600.
All the people I deal with, (not the Financial circles as everybody can tell) are tired, scared sh|tless of loosing their job, or jobless, and mad as hell.
NOBODY I know in the average (not even middle nowadays) class is spending any money unless it is absolutely needed. No fun. Just grunt grunt work work bitch bitch.
April 27th, 2010 at 11:52 pm
I dunno … this OUGHT to be a fairly minor correction, with a less-than-equal bounce back, followed by another step lower, staggering across the summer and into the fall, but the downgrades of Greece and Portugal are a lot more serious business than the public keel-hauling of a Bananamerican bankster (especially when we all know that in the end, the most that will be done is a minor fine, that Blankfein could personally deal with without feeling any pain). When you look at what the downgrades have done to the Greeks’ and Portuguese’ ability to borrow money, it’s threatening to do serious damage to Europe … the kind of serious damage where the debt-drunk colonials might be expected to pitch in to keep the world from coming unglued (and that may not be possible, in any event).
Ask me again on Monday morning.
April 27th, 2010 at 11:56 pm
btw, there’s a brilliant pastiche of Jack Nicholson’s rant over at Calculated Risk:
http://www.calculatedriskblog.com/2010/04/market-update.html
April 28th, 2010 at 12:15 am
@wally- contracts shouldn’t be one sided, yet can and do become so, from time to time. Greece is a spendthrift country, but is it any more or less disconnected from reality than California? Are there not 49 other states that are going to have to carry the weight of California’s eutopia? I say this not as a stick in the eye but to demonstrate that difficult decisions have to be made and the EU either has to decide to get through this a one Entity or risk dissolution. Not saying it is right or wrong. It will get resolved either way, but careful thought is probably being given to risks, costs, long and short term to each path…
Hey, we were that successful the first go around…what was that…the Article of Confederation. Gave states too much power and very little to a centralized power, if I remember correctly (too long since a history class, and the kids are still to young to have covered it…) Maybe the EU is a half-cooked idea that needs modified anyhow.
As for the market- when you consider all that is going on, it is amazing how resilient it is. It seems that with any sense of resolution, this market will buoy up again for the sole purpose of vexing all the doubters. Have to love the passive-aggressive streak this market seems to have…
April 28th, 2010 at 12:27 am
The S&P earnings are improving but remember what caused them to plummet last time–a banking crisis. It’s going to happen again and earnings will plummet.
April 28th, 2010 at 12:28 am
How is the European situation resolved and how bad will it get?
If we knew the answer to this, then we could have a better shot at predicting market direction.
Unfortunately, it seems that in Germany politicians aren’t able to step up and explain to the public how Germany benefits from monetary union and counter-cyclical economic policies. Maybe the politicians don’t get it themselves or maybe they’re pandering to public opinion. It’s as dumb as our stimulus debate here. It’s also a pity that Obama hasn’t gotten involved or led; after all, the US was the biggest blower of the debt bubble.
As for the Goldman situation, I would like to know if Barry thinks there is anything to the “market maker” arguments that they put forward. Put aside the SEC case, and put aside that in reality they seem more like directional players than market makers: if they were market-makers, what would be their disclosure requirements? Also, I would like to know what Barry thinks will happen beyond the SEC case. In a year or two, what will happen with the financials and how will our economy and the world economy look?
Today, with the Goldman hearings, I realized how addicted I am to this blog. It’s the first place I looked for an honest take.
April 28th, 2010 at 2:30 am
Why are people always trying to predict the unpredictable-government and power elite manipulated-media driven, casino like-corrupt entity that the stock market is? If your prediction turns out to be right… you will have just been lucky. The market has spun out of orbit and away from any fundamentals. The amount of variables in this equation is overwhelming. Face it, the people transfixed by the stock market are basically gamblers with a hope of getting rich quick. The majority of stock market investors (excepting some lucky traders) are at the same place they were 10 years ago, or worse. It’s become the biggest Monte Carlo of the world and the house always wins. Investors need to find honest, decent, ethical ways of using their capital and making money. Socially responsible things that help to build wealth for themselves and their country. Businesses that you can believe in and support because they offer products and services that help to make a better world. The stock market it a big distraction from the real world.
April 28th, 2010 at 4:39 am
Bonjour,
La volatilité est de retour, nous n’y étions plus habitués.
Le SP500 est venu se cogner la tête sur une grosse résistance Fibonacci + la Moyenne mobile 200 en semaines.
Je crois que la hausse n’est pas terminée, ce marché va nous surprendre encore par sa force
Hello
Volatility is back, we were no longer used.
The SP500 has come banging his head on a large Fibonacci resistance + the moving average 200 weekly.
I think the increase is not over, the market will surprise us again with his strength
April 28th, 2010 at 5:19 am
I don’t see why we wouldn’t sell off a bit. Stocks are rather over-valued if we use realistic expectations of growth in the future. The financial stocks are rather wildly over-priced if only because most of us don’t do a tab of acid every morning with our coffee. On top of all that, May isn’t an especially bullish month, on average, for the market.
As for the EU, Greece and the Euro: critics of the Maastrict Treaty pointed all of this out 10+ years ago. Critics of allowing the “southern tier” nations into the Euro notice this on top of the structural problems in the Euro. Those who ignore history are condemned to repeat it, and as such, Greece is nothing more than “lather, rinse, repeat.”
April 28th, 2010 at 7:33 am
I’m a brand spanking new investor (as of February), and I just don’t understand people who say the market is overbought. P/Es are under 12 on a lot of great stocks, and the prices on many are at one-third to one-half of what they were in the years prior to 2008.
April 28th, 2010 at 7:49 am
All is well, Don’t worry, Be happy. Don’t get caught up in the hype. Take profits on each upturn. Review your stops regularly. Nothing new here, move along.
April 28th, 2010 at 8:23 am
More grease, all over the Gulf Of Mexico. Drill, Baby, Drill….
http://www.cnn.com/2010/US/04/28/louisiana.oil.rig.fire/index.html?eref=igoogle_cnn
April 28th, 2010 at 9:06 am
Don’t fight ZIRP. “Investors” won’t accept 0% until they have to. Greece may actually scare the big players into looking within and start behaving. Could be pie-in-the-sky, though.
BR. Have you done a piece on demographics? I’m curious how people think the market will behave once the baby boomers start feeding off their investments in droves. I don’t know how my generation can out-buy the wave of selling that is coming. JMHO.
April 28th, 2010 at 12:47 pm
It’s an overdue correction that will be followed by a vigorous summer rally and then a serious decline going into at least September.