Dow back over 8000

[opebo]

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We're getting there.

No, the Torie case is inapplicable here because the vast majority of people cannot save under any circumstances due to low incomes.  Torie 'saved' because of a privileged income.

If the country as a whole is in a depression it will be because we have a government policy to have a depression, not because of anything the little Tories and sub-Tories 'decide' to do.

I had a rather high savings rate. If consumers were in general like me (at least until recently when I started to substantially accelerate my spending), the US would be in a permanent depression.

No. Either investment (direct or indirect) would increase proportionately, or prices would fall until markets cleared.

Oh good lord. 

[Sam Spade]

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That "sounds" fascinating. Pity I have no idea what it means.

Well, before BB made his QE announcement, the yield on the 10-year bond was at just over 3.00%.  Immediately afterwards, the 10-year gapped or dislocated (within a few minutes) down to just under 2.50%.

As of the close of business today, the 10-year is now back to being slightly above 2.90%, which means that we've regained nearly all of the "gap" caused by the QE announcement.

BB desperately wants to keep the 10-year below 3.00%.

[opebo]

BB desperately wants to keep the 10-year below 3.00%.

Why?  He wants to push harder on the string?

[Torie]

I had a rather high savings rate. If consumers were in general like me (at least until recently when I started to substantially accelerate my spending), the US would be in a permanent depression.

No. Either investment (direct or indirect) would increase proportionately, or prices would fall until markets cleared.

Sure there will be market equilibrium eventually. However, the standard of living would be slashed, unless one counts more free time as a good.

[frihetsivrare]

This is only a temporary, upward correction.  The Dow will go below 5000 eventually, likely this year.

[Fmr. Pres. Duke]

Below 5000? That's about as bearish as I've ever read. I think we could test the 6500 low we saw at the beginning of March, but unless we totally unravel, I have a hard time seeing us test the 5000 barrier.

[Beet]

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That "sounds" fascinating. Pity I have no idea what it means.

Well, before BB made his QE announcement, the yield on the 10-year bond was at just over 3.00%.  Immediately afterwards, the 10-year gapped or dislocated (within a few minutes) down to just under 2.50%.

As of the close of business today, the 10-year is now back to being slightly above 2.90%, which means that we've regained nearly all of the "gap" caused by the QE announcement.

BB desperately wants to keep the 10-year below 3.00%.

Bernanke is in a pickle, because the better financial markets do, and the more successful he is at fighting deflation (which seems to be his goal for now) the more pressure there is on bonds from the corresponding rise in risk-seeking and price expectations, respectively.

[J. J.]

1.  I think the bank "bailout" was probably the best thing done.

2.  I think you will have to wait until September to see the longer term view.

[Lunar]

Below 5000? That's about as bearish as I've ever read. I think we could test the 6500 low we saw at the beginning of March, but unless we totally unravel, I have a hard time seeing us test the 5000 barrier.

sounds like somebody is going to end up buying canned food from SS at %1,000 markup once anarchy and local spear-throwing warlords take over

[Joe Biden 2020]

I'm a little more optimistic than most people.  I think we could go back barely below 7K, but no lower than, say, 6800.  I think we're starting to turn a corner.  For instance, look how the market has responded in the light of bad news the past month.  The jobless rates are pathetic and the foreclosure rate is horrible, but the market seems to be responding with resolve to lead the country, and thus, the global economy, out of this mess.  I think we're still at least 2 years away from getting anywhere close to where we were in early 2007 before things started trickling south.  We'll have setbacks along the road, but I think the market and the overall economy will take 3 steps forward, 2 steps back, but we'll eventually get there.  I believe the market is more likely to test 9,000 than it is 6,500.

[○∙◄☻¥tπ[╪AV┼cVê└]

I care a lot more about the job market than the Dow.

[Fmr. Pres. Duke]

I'm a little more optimistic than most people.  I think we could go back barely below 7K, but no lower than, say, 6800.  I think we're starting to turn a corner.  For instance, look how the market has responded in the light of bad news the past month.  The jobless rates are pathetic and the foreclosure rate is horrible, but the market seems to be responding with resolve to lead the country, and thus, the global economy, out of this mess.  I think we're still at least 2 years away from getting anywhere close to where we were in early 2007 before things started trickling south.  We'll have setbacks along the road, but I think the market and the overall economy will take 3 steps forward, 2 steps back, but we'll eventually get there.  I believe the market is more likely to test 9,000 than it is 6,500.

Theoretically we could test both. The DOW could continue its rally through the summer and test 9000 before it's over with, and then we could see a huge selloff in the fall before making the final bottom late this year. Ideally, January 2010 should be the beginning of a bull run and the economy should begin to grow again. None of these things are a guarantee, and there is a scenario where things get worse and inflation skyrockets.

FYI, we're in a bear market rally right now, so it's expected that the market doesn't always respond the way we think it should. For example, RIMM lowered guidance and estimates a few months ago and then beat those conservative estimates and the stock goes up 20% and more. It doesn't make any sense.

Which one will we see? Who knows, but the big spending and massive deficits, I'm inclined to believe the latter could happen rather than the former. I'd certainly welcome the former, though.

[2952-0-0]

Below 5000? That's about as bearish as I've ever read. I think we could test the 6500 low we saw at the beginning of March, but unless we totally unravel, I have a hard time seeing us test the 5000 barrier.

sounds like somebody is going to end up buying canned food from SS at %1,000 markup once anarchy and local spear-throwing warlords take over

Nikkei at its peak: 40000

Nikkei today: 7000 something.

Who says anarchy has to break out when the stock market crashes?

[opebo]

I care a lot more about the job market than the Dow.

That one's been terrible since about 1979.

[Sam Spade]

The end of today would have been a good time to take a lot off the table.  I expect somewhat of a reversal Monday even though it is options expiration week.

Keep in mind - I do think the market can still go higher (maybe as much as 900-1000 points on the DOW, even though I suspect 300 or so is a more likely target).  But we are reaching the point of diminishing returns as with regards to upside and danger below.  Better to sell now and reload if we get any significant retrace before the summer.

There is also the possibility we will play within a trading range for a while.  Just mentioning it.

[Sam Spade]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

[Fmr. Pres. Duke]

Who knows. Most of the banks report earnings next week, so its possible we see another pop. I'm still waiting for a downward turn. I have a 56% profit in BAC, so its probably good to sell before earnings are released. The same with AAPL.

[k-onmmunist]

Anyone that thinks the Dow will go below 5,000 doesnt get it.

[Mint]

Anyone that thinks the Dow will go below 5,000 doesnt get it.

Anyone who thinks this is anything other than a bear market rally doesn't get it.

While devaluation to that extent may not occur, the reality is the banks just don't have any money right now. That's why the government refuses to actually elaborate on these so called 'stress' tests and why they keep letting the banks 're-adjust' the value of assets way above what the market will actually pay for them. Unless there's serious re-financing of the banks and/or liquidation of useless assets I don't see the recession ending any time soon.

[War on Want]

Anyone that thinks the Dow will go below 5,000 doesnt get it.

Anyone who thinks this is anything other than a bear market rally doesn't get it.

I sadly have to agree with this.

[The Duke]

The profitability of banks is demonstrating that TARP worked and the Geithner plan is about six months too late to matter.  He's fixing a problem that basically no longer exists.  It also shows that blithering idiot Paul Krugman and his bank nationalization nonsense should never have been taken seriously.

But anyone who thinks this is anything other than a bear market rally is just wrong.  Watch the bond market, which Obama is demolishing, and the commercial real estate market, which is going to do in 2009 what residentials did in 2008.

[Sam Spade]

Who knows. Most of the banks report earnings next week, so its possible we see another pop. I'm still waiting for a downward turn. I have a 56% profit in BAC, so its probably good to sell before earnings are released. The same with AAPL.

Don't wait.  Act.  I'm not going to repeat the "bulls, bears, pigs" line again.  If you think you're going to get another few hundred points, but the odds are more likely that you're going to lose a few hundred points and you could lose much more than that, pull a good bit off the table - it's been a nice run.  That's where we're at right now in my book.  Remember, after the Wells Fargo joke on Friday, earnings may already be priced in if they're good.  Also, financials and tech are the two places easiest to manipulate earnings (think about what that means for other companies) and I've already said that I expect the banks to overperform earnings expectations for this quarter.

I lost a bit by pulling out in June 2007, but I'm not crying now since I don't play daytrader.

[○∙◄☻¥tπ[╪AV┼cVê└]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

The stock market is up during the Obama administration, but I don't see that helping with jobs. 1.3 million have been lost in the last 2 months, while a quarter million should have been created just to keep up with growth in the labor pool. 1.5 million jobs short in 2 months is terrible.

[Sam Spade]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

The stock market is up during the Obama administration, but I don't see that helping with jobs. 1.3 million have been lost in the last 2 months, while a quarter million should have been created just to keep up with growth in the labor pool. 1.5 million jobs short in 2 months is terrible.

There is no correlation where a 500+ gain = gain of 100K or 200K jobs in the US.

I understand your concern, but you can't just create jobs for the sake of creating jobs. 

There is presently a major oversupply in labor in the US fwiw, and generally that labor is overpaid compared to the global wage rate.  All of this will correct itself over time - it would have happened long-term anyway, but the process is going to be sped up due to massive deleveraging.

[○∙◄☻¥tπ[╪AV┼cVê└]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

The stock market is up during the Obama administration, but I don't see that helping with jobs. 1.3 million have been lost in the last 2 months, while a quarter million should have been created just to keep up with growth in the labor pool. 1.5 million jobs short in 2 months is terrible.

There is no correlation where a 500+ gain = gain of 100K or 200K jobs in the US.

I understand your concern, but you can't just create jobs for the sake of creating jobs. 

There is presently a major oversupply in labor in the US fwiw, and generally that labor is overpaid compared to the global wage rate.  All of this will correct itself over time - it would have happened long-term anyway, but the process is going to be sped up due to massive deleveraging.

You realize that if the current system really can't handle giving out jobs to most qualified people, people are going to be looking for a new system? Worker productivity keeps rising in the US, while wages stay the same or go down. France has a 35 hour work week, while a lot of positions in this country require 50+ hours of work a week.