Market Rally Open Thread
By Barry Ritholtz - August 2nd, 2010, 8:30PM
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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.
August 2nd, 2010 at 8:36 pm
It’s a move up, choppy but up.
August 2nd, 2010 at 8:38 pm
small caps notable laggard today. cant remember last time I have seen that on a big up day like today. much resistance ahead. fundies mixed at best and possibly nasty down the road. commodities are starting to look stretched. markets running on improved technicals and perceived “not as bad as previously” feared news out of China and Europe. window of opportunity for bulls to keep the balls in the air through August. but at the end of the day, the fall will be even harder….
August 2nd, 2010 at 8:40 pm
Either a random fluctuation or evidence that the market thought things were really horrible and now upgraded its view to merely terrible.
August 2nd, 2010 at 8:41 pm
I agree with Marcus, I am in the camp of the correction being over. I am short UST’s and long Emerging, Tech, and Utilities.
August 2nd, 2010 at 8:47 pm
when the good news driving the market is “… we were down less than we thought….” watch out — suckers rally.
August 2nd, 2010 at 8:54 pm
Oh the joy! My HOT short is ‘taking it in the shorts’…
BR, Larry Kudlow had David Stockman on his CNBC show tonight:
http://www.cnbc.com/id/15840232?video=1557942119&play=1
~~~
BR: Yeah, I got the invite but had other committments
August 2nd, 2010 at 8:57 pm
It’s movin’ on up. What spectacularly bad economic news such as the end of the dotcom bubble and the end of the housing bubble is there? OK, we will grow slowly but we will grow. Everyone wants it and everyone is trying to come up with new and compelling products and services. It is man’s nature to want to acquire more nuts for the winter and there is that ancient need for poontang that drives all of us to achieve and succeed.
August 2nd, 2010 at 8:58 pm
desperate people do desperate things.
How can even a fraction of the liquidity return to the market without destabilizing it?
A better question is this a value-driven move or inflation? Maybe the mother of of all equity bubbles is coming.
August 2nd, 2010 at 9:00 pm
Giant head fake. All the superficial beauty is marred by the cold reality that you can’t have real movement with 10% of the work force out of work. You don’t cost cut your way to prosperity.
August 2nd, 2010 at 9:01 pm
It’s a move up (for now).
It’s a “higher high” on the daily chart ($SPX) so it’s a trend continuation. Market breath confirms this move. New Highs are expanding where New Lows did not on the previous “correction”. If you put away your tinfoil hat and just look at price, it’s a nice stealth summer rally.
Doesn’t mean we won’t crash and burn from here, but we’re in a nice little profitable trading rally.
August 2nd, 2010 at 9:05 pm
Market rally seems like it has legs, but a couple of red flags: Treasuries not buying it and most if not all leading indicators are moving lower. the right shoulder (another one?) may be forming, but if it breaks through, then i’m thinking a double top. Too many questions, VIX is almost breaking 20 = complacency…
August 2nd, 2010 at 9:11 pm
10% of the work force is out of work? Its a hell of lot more than 10 %. And new jobs are nowhere to be found. I am agreeing with the fellow who says not to trust this but 10% is accepting the churned govt figures, which even the govt concedes are so “low” precisely because they stop counting discouraged workers
August 2nd, 2010 at 9:12 pm
mrmike,
you trying to channel your inner-’Billy Ray’ ?
ref.: http://www.starpulse.com/Movies/Trading_Places/
~~
tho, w/this http://finviz.com/futures_charts.ashx?t=ES , doesn’t seem like we’re ‘home’, yet..
~~
but, a better Q: may be whether, or not, we see Oil N. of U$D 85 ..
http://finviz.com/futures_charts.ashx?t=ENERGY&p=w1
August 2nd, 2010 at 9:15 pm
http://www.youtube.com/watch?v=emkHnSY_1sk&NR=1
if a 2 percenter just isn’t enough to make ya happy, the top 10 crossover moves says somebody who put the video together and looks about rightish
August 2nd, 2010 at 9:23 pm
How about a moment of silence to commemorate the passing of Mitch Miller? RIP, Mitch. You made us all smile.
http://www.youtube.com/watch?v=N0sXyfFf_Us
August 2nd, 2010 at 9:25 pm
I say its 2004 again and we have an ugly meatgrinder market. Tough grinds up and down.
August 2nd, 2010 at 9:33 pm
@Chromex: Yeah, I agree with you. 10% was simply short hand for “really, really high unemployment, underemployment, etc.” You are correct.
August 2nd, 2010 at 9:33 pm
http://www.ibtimes.com/articles/39780/20100730/elections-stocks.htm
August 2nd, 2010 at 9:38 pm
The best way to summarize today’s action: start taking profits in anticipation of the pending dive that is historically what Sept produces. The globe needs the push from a Euroland recovery, and that simply is not in the cards. And the average retail investor is assuming more speculative risk. Oh, and lest we forget the pending home foreclosures. Ah the joys of volatility and day trading. Patience requires a strong stomach, but not one plagued with ulcers.
August 2nd, 2010 at 9:41 pm
I sleep better than in ’08….I’m in Cash, CD’s and Dividend Stocks (only 10…but they are modest but above treasuries in dividend returns) and it took work to rebalance my portfolio…but my PE’s are low…and I can wait them out even if they fall in PE…or dividend… and still beat current treasuries return to give me something. My cash is okay…and no debt.
But, then, I’m not a trader…manage my own.. I still sleep okay these days….. I might be in the minority of your readers…but then there must be some who still keep up…but want to sleep safe and so we are dealing the best way we can.
I don’t have any ideas how you guys can play this…such confusing times, it would seem to have to be making trading decisions. But, I give you all credit if you can deal with the stress.
August 2nd, 2010 at 9:43 pm
ECRI/WLI suggests that it’s a suckers rally. Next year earnings about $72 (As reported, ignore the “Operating earnings” projections which our friendly Wall Street equity and snake oil salesmen now use unchallenged by commentators. Then stick a 10X multiple on that for a bottom?
August 2nd, 2010 at 9:45 pm
Typical summer rally. Take a look at the long term charts. The market usually bottoms in July and then has a rally. Wait for the big boys to come back from European vacations
August 2nd, 2010 at 9:57 pm
I think it’s too soon to say that this is a bounce or the start of something bigger as the market currently has an inverse relationship with the UUP and the bullish dollar has retraced about 62% and typically we should start seeing some bullish action on the UUP, but if not then this will be a short term rally for the next couple weeks.
August 2nd, 2010 at 10:01 pm
Up, but very noisy. Exporting and global-economy companies will do best near-term (weaker dollar). Tech maybe has a few quarters of upside while companies continue to upgrade old servers to multi-core, virtualization, and networks. But many tech stocks are already pricing that in.
Longer term, commodity and agriculture will kick in due to global demand. Local-economy-driven stocks will be the last to recover (construction, consumer discretionary).
August 2nd, 2010 at 10:02 pm
Choppy move to SPX 1170 now me thinks. Today’s move was predictable after the bull flag that formed last 3 days of last week. Now latecomers will pile on but today is the big move for the week. Staying flexible as to what happens September and October, only way to play this market is week by week.
August 2nd, 2010 at 10:04 pm
A few data series have produced new momentum highs. For example: The number of stocks making New 20 Day Highs hasn’t been this elevated since March 2010. Additionally, the number of stocks making New 20 Day Lows has essentially dried up since early July…..path of least resistance is up.
Chart Period – March 2010 – Present
http://1.bp.blogspot.com/_GCk1spliaTo/TFYFJ_ABfDI/AAAAAAAAA6I/3bZugSRpv4s/s1600/20HL.png
August 2nd, 2010 at 10:17 pm
Android experiences unprecedented U.S. growth, next stop China?
“…Independent tech analyst group Canalys issued its own analysis of the smartphone industry on Monday, which found that Android-based handsets experienced an incredible 886% growth worldwide during the second quarter of 2010…”
http://www.betanews.com/article/Android-experiences-unprecedented-US-growth-next-stop-China/1280786062
This song has the same timbre as the PC boom of the eighties. The upcoming inventions, spin offs, ideas, and start ups will maintain the new productivity boom.
I have no advice if you’re day trading, worried about September, October, the Death Cross, the Jupiter/Uranus conjunction, Central bank gold horders, Obama’s secret plan to destroy America, or a head and shoulders ‘what have you.’ …you have Fox News to keep you abreast of things.
August 2nd, 2010 at 10:24 pm
A couple months ago, I was of the opinion that we were seeing the end of the cyclical bull market and the resumption of the secular bear market. I have now been persuaded to be of the opinion that the cyclical bull will continue for some time more. We are in wee 4 of an intermediate cycle and probably wont reach the top until we will not see a top until week 18 (give or take a couple of weeks). If we are still rallying into Nov., the elections could easily stretch out the cycle and we wont see a top until we are going into the new year. At some point we will see the secular bear market return, but I am now no longer convinced that the cyclical bull is dead.
August 2nd, 2010 at 10:29 pm
2% but on below average volume… i think we are headed for strong resistance in the 1140 area which is the 61.8% fibonacci retracement from april highs to june lows
August 2nd, 2010 at 10:30 pm
Most of the folks that I trust are in the summer rally camp. Lowerys entrail observers as well as Dick Russell’s DOW THEORY interpetation and other that have been trustworthy in the past seem to believe that this market is as strong as bull’s breath. Better to be on the bull than in front of one.
August 2nd, 2010 at 10:45 pm
Liquidity in the US financial markets will increase as the surplus EU countries join China and Japan in competition as the biggest consumer market remains standing despite itself. What happens when the voting population ties national deficits to high and rising unemployment and say NO MORE to the people on Capital Hill?
At some point the American people will rebel. They will say no to another Obama, Bush or Clinton. They will say we don’t care who but they must get us our jobs back. That will result in a trade barriers with China, Japan and Germany. After that who knows but the requisite reballancing will likely not be painless.
August 2nd, 2010 at 10:48 pm
I keep hearing about THE recovery when it’s unclear if there is even A recovery on the horizon. Hard to maintain an upward course in face of a deflationary environment.
August 2nd, 2010 at 10:59 pm
We’re still stuck in the big trading range (1025-1150), and the move up is within that context. Also, the bond and equity markets have diverged during this latest rally — the 10-yr’s still stuck under 3%. Clearly, one of them is going to be proven wrong …
August 2nd, 2010 at 11:00 pm
S&P 500 is up approximately 10% from the July lows. Obviously a bounce has occurred, who cares if it is a head fake or a new up leg. I see it at least going to the April highs.
Doesn’t Art Cashin say that the market climbs on a wall of worry?
August 2nd, 2010 at 11:02 pm
First trying to understand the May – July Period 2010. European crisis affected the stock markets and “felt” like 08-09 with the market acting similarly (although not as devastating). European crisis affected business early (ISM) and finally the consumer (Consumer Confidence). Greater clarity in the economic picture will reverse underlying economic factors and in 2-3 months we will resume from the same market levels that we hit before the European crisis on the same or lower trajectory (lower growth rates). I do expect a near term correction due to the overbought market conditions. Finally, jobs will show up in the next three months as your leading rorschach chart and other indicators are showing (see link):
http://www.conference-board.org/data/helpwantedonline.cfm
Of course you still have the same risks out there that have been threatening the market/economy; Sovereign Debt, Jobs, US debt, China, Real Estate. Just now these seem to be subdued and even played out for a while. Jobs will come back at the same pace of the early 2000s recovery which will be slow but with a noticeable uptick soon over the job add rate we have endured in 2010.
If China decides to be more aggressive in its revaluation because of a decreasing dollar then we may hit the April Highs sooner. A decreasing dollar value may increase inflation risk in China and might force their hand.
August 2nd, 2010 at 11:03 pm
I thought the market was run by skynet aka HFT computing systems? Thus the rally today is irrelevant but great for reporting on the news. The day of reckoning still needs to come for Greece, Spain, and eventually the U.S.
On the U.S. side of things, policy will likely dictate what happens next: what’s going to happen with income tax? Subsidy and other programs for infrastructure and housing? Some have ended. Will they be renewed?
August 2nd, 2010 at 11:06 pm
Watch the bond market. One must follow the other. Usually the bond market leads but nowadays it’s anyone’s guess. Either the 10 yr is going to 3.4% with more equity spikes or the equity rally will roll over to meet up with a flat to declining long bond.
August 2nd, 2010 at 11:08 pm
Last year there was a mini head n shoulder pattern that obscured a larger reverse head n shoulder pattern. The small one was the head fake that had some believing things were going down, the larger prevailed. This year the reverse is the smaller, and the head n shoulder is the big one.
It’s possible to enjoy the ride of this mini patter up to 1135-1150, but I wouldn’t stay for the whole ride… The bigger pattern will prevail, most likely.
Helene M. mentioned the sentiment is approaching levels it was at in April–and so quickly after being in the pits… Additionally, the treasury markets still do no reflect belief that this is “real”
My Point n Figure charts are all very good charts– short, intermediate, but not yet the long. Other indicators show well, but some do not. VIX seems to be wandering back to complacency, Put/Call likewise.
Plus one must respect how well this year is matching with the presidential cycle–perhaps with more amplitude, but directionally and timing wise, it is following the script.
Something somewhere clearly scared more than a few Fed governors over the past few weeks. Words spoken and printed have alluded to something we have not yet seen in the publicly released data. Yet the earnings show has distracted us in a clever way. Fundie guys always talk about how hopeless technicals are because it is so “rear view mirror”, and somehow it seems like the pot calling the kettle black. So easily amused by the “better than expected game”, so happy to take numbers from the past and extrapolate them forward… Yes, that is foreward thinking.
What I really want to know is what Barry’s holistic methods say–combining the quant, the techie, the fundie, and whatnot into a sum or the parts. What grade does this method give this market, Barry?
You give us free-reign so you on nights like this to gauge sentiment, perhaps, but what say yea? Praytell, enlighten us with your thoughts.
August 2nd, 2010 at 11:08 pm
Instead of saying, “investor sentiment has turned positive.” Why not say “automated trading program sentiment turned positive.”
August 2nd, 2010 at 11:09 pm
Oh, and volume blows. The worst first trading day of August in 4 years… 30% less trading volume than last year. Whatever it is doing, there isn’t much supporting it.
August 2nd, 2010 at 11:15 pm
Time to go 100% Long.
August 2nd, 2010 at 11:18 pm
This is the beginning of a substantial rally higher in equities. The logical part of me says the market should not rally from here, but I just don’t see anything to bring the market down in the near term and the buyers will find every reason possible to justify a higher market. I think this recent meltdown pushed a lot of people out of the market and they will get back in in fear of being left out. The shorts are a fatigued bunch at this point and I just don’t see where the selling pressure will come from.
August 2nd, 2010 at 11:19 pm
NewBob88, you mean 300% long, right?
August 2nd, 2010 at 11:44 pm
Was there a concurrent increase in volume with today’s rise? If not, why should it mean anything at all?
How many 2% rises had we had so far this year? If we laid them all end-to-end, we would be up by how much?
And how much are the markets up so far YTD?
August 2nd, 2010 at 11:51 pm
It’s prolly the start of something bigger, but bigger up or bigger down, I haven’t a clue.
What I can say is that in the fullness of time we will see both bigger up and bigger down moves — I just can’t quick make out the order in which they occur …
Did that help?
August 3rd, 2010 at 12:25 am
Basically, as predictable as ever….
August 3rd, 2010 at 12:48 am
Bernanke speaks, the shorts cover. Nothing more than that. If you are truly bearish then at this level the S&P500 is only 7% below the peak which is too, too good not pass up and dump whatever you have. If you are bullish then you need to wait for various upside levels to be broken (everyone who is writing here has their own indicators).
As for me, I believe that since the breakdown indicators that were achieved in May-June did not tank the market, then it won’t be tanked. All of the Roubini-Maulden (spelling) doom and gloom is known and been around for a long time. Its in the market. So, I’m 80% in and looking for more small growth companies to buy. Any idea?
August 3rd, 2010 at 12:51 am
That was amazing. All the different answers for one question. It just goes to show what makes a market so interesting. Many opinions are similar but like fingerprints, I don’t think any two are identical
August 3rd, 2010 at 12:58 am
PBR is probably a buy @ 36.50 to 37 (DYODD). US equities will get pushed upward. Some commodities are jumping sharply. Copper with a floor at 3.00? It’s a story that the Chileans are pushing. Worth a good thunk.
I have been wondering about the expiration of the Bush tax cuts and its effect on treasuries emissions. What happens in May of 2011 if they are allowed to expire and the effect on revenue becomes clearer?
August 3rd, 2010 at 1:01 am
It sure feels like the market is getting pawned again to me (as far as my trading rhythms go) I wouldn’t be surprised to see a down week by Friday. The cow needs to be milked.
http://www.youtube.com/watch?v=fr03yiJ5ndk
August 3rd, 2010 at 1:05 am
Don’t know where we are going from here, but since late summer of 09 I have been convinced of one thing: The thing the whole investing world wants the most will, for that reason, not happen. That is, another big leg down….That would be an unearned and free shot at the apple during the inevitable recovery… and those don’t exist except where manufactured in liberal lala land, where they nearly always end in disaster…. fannie and freddie come to mind unbidden….
August 3rd, 2010 at 1:19 am
What’s the risk?? The Fed has mandated the market to go up; and up it will go until debt really matters…. Then its going to take a lot of lipstick to …..
August 3rd, 2010 at 1:31 am
Smoke. And. Mirrors.
Amazing what you can do with a bunch of HFT computers in an otherwise dead market.
August 3rd, 2010 at 2:50 am
1st (trading day of) the month+weekend effect + no intervening bads news during weekend (Chinese PMI is a non data point since its direction can easily be spun either way) + residual celebration of rear-view-mirror earnings from last week; no implications beyond this week since there are no new/revised major story lines; only caveat is the usual that momentum can be it own reward & that, of course, presence or absence of retail segment is irrelevant to validity of the caveat.
August 3rd, 2010 at 3:21 am
Yet Shanghai is off 1.7% at the close. It’s a global washing machine.
August 3rd, 2010 at 6:53 am
To use the phrase ZH has coined: No-Volume Melt up.
All computers, no sellers.
August 3rd, 2010 at 7:12 am
Over the weekend in Rhinebeck they where talking about a Dead Dog Bounce.
August 3rd, 2010 at 8:47 am
Lots of companies are making good profits now and have a lot of cash and are decreasing their debt.
That makes them good buys.
One thing for sure: when everybody is negative and nobody thinks you should buy equities because there is no good future, that’s when you should be in there carefully picking your positions and accumulating future quality.
August 3rd, 2010 at 8:57 am
Mutual fund monday.
COme on people….we rally 2% because China comes out with a horrific manufacturing number? Their worst showing in 17 months and we rally 2%???
Thanks CNBS for spinning this so it reads, China Government not going to turn off the spickets for free money. The fact that we NEED governments to continue pouring money into a black hole to “spur” the economy is pathetic. HFT traders know mutual fnds buy on Mondays….they create the buying and thats all it was.
The fact that people buy into days like this…not sure if its pathetic as weel, or just plain stupidity.
August 3rd, 2010 at 9:38 am
turn kudlow down? Nice
only thing nicer would be for one brave soul of the reasonable half of his panels to call him on his BS.
August 3rd, 2010 at 9:55 am
A rentable move, but do not sign a long term lease. Waiting for another “BP” moment somewhere in some sector to grab value at a deep discount.