Todays rally ..does it prove anything yet?

[The Dude]

Recovery is in motion.. do you believe it? the markets today certainly were positive, the FT short view below suggests that things are improving;

http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html

How long will this rally continue? anything lying in wait to knock the stocks down in the near future?

The dude.

[0ICU812]

"Todays rally ..does it prove anything yet? "

Simple answer .... no.

[aiki14]

Nothing is proved. Although the market seems to be turning a corner lately there is still a lot of hard data to digest. While there are many pundits talking about generational lows having been put in at S&P 666, most traders still think we could retest the 740 level or worse. The market is subject to capricious moves and one should trade with this in mind.

[0ICU812]

Longer answer. I'll have to say that recently S&P has been behaving in a peculiar, bullish, manner. First upside target 800ish, taken out. Then 815, taken out. Now its 850, and maybe even 900.

To confuse things, CNBC, Bloomberg, etc. are reactive. When mkt drops, then we are on hell's door for years to come and that's all they talk about. When it rises, "the bottom's in" and "get onboard or you will miss the train."

But, there is the continual drumbeat of Jim Rogers, Peter Schiff, Gerald Celente, Marc Farber, et. al. that make a compelling case about excess spending, excess debt, inflation, and US non-manufacturing. Also, M2M rule changes does not change fact, only obscures balance sheets, and Jobs report is bad, and getting worse.

So we have a rising S&P against an ever-worsening backdrop. Some say its market anticipation of a getting out of recession. Cynics, like me, say its the market makers pulling in $$$ from longs to take their money when they pull the rug.

So, as they say, "the market can remain irrational longer than you can remain solvent."

[pedrom727]

I think the speed and magnitude proves that this is the huge 50%+ bear rally many have been anticipating for a while. However, that does not mean at all that I'm bullish on our economy. During the depression we also rallied about 50% only to fall to much lower lows. I easily see us around 3500-4000 on the Dow around years end, but there's no use in fighting the tape and I'm currently very long S&P related products until June expiration.

[simpletradesnet]

I think the speed and magnitude proves that this is the huge 50%+ bear rally many have been anticipating for a while. However, that does not mean at all that I'm bullish on our economy. During the depression we also rallied about 50% only to fall to much lower lows. I easily see us around 3500-4000 on the Dow around years end, but there's no use in fighting the tape and I'm currently very long S&P related products until June expiration.

i still believe the S&P will eventually break under 500 before turning back up for good.

[Bolimomo]

I think the speed and magnitude proves that this is the huge 50%+ bear rally many have been anticipating for a while.
Is that 50%+ counting from the low?

S&P low as 666. 50% would take it to about 1000. It is now at 830'ish and seems to be meeting resistance for the past week. 1000 is possible. We'll see...

[pedrom727]

Yea, 50% from the low, which is hardly any progress towards recouping losses from the peak in the 1400s. Still creates a nice opportunity for traders. I see pretty heavy resistance at 1041 on S&P, that's my current target looking out to June. With a lot more volatility and faster trading than in the depression era we might get a throw over up to 1100 but I'd be a seller in the 1000s for sure even if I don't catch the top.

[Bolimomo]

If S&P hits 1000, SKF may just go down to 20. And FAZ might take over UYG now at 3.00. 8O

[pedrom727]

Yea for sure, SKF is a horribly created product with so many different risks in it. I learned the hard way to not try to convey my forecasts using ETFs that aren't directly correlated with whatever I'm tracking. I stick with the simple SPY now :)

[Horsefish]

I'm sitting here this weekend thinking over last week and planning for next week. I remember several talking heads on CNBC talking about mutual funds buying and money flowing into last weeks rally. So, I'm thinking "who is crazy enough to put money into a mutual fund that is buying stocks right now?"

The thought occurs to me that it is tax time. Now is when people who don't manage their own investments put IRA and 401k contributions for the 2008 tax year into their accounts. Most of that money goes into mutual funds that are required to invest it.

If the above is the case, then as April 15 approaches this new money will dry up and the bid will decrease. Hence, I am looking to build some positions in the broad index short etf's, like SDS, if the market continues to rally next week.

[Gordo]

I'm sitting here this weekend thinking over last week and planning for next week. I remember several talking heads on CNBC talking about mutual funds buying and money flowing into last weeks rally. So, I'm thinking "who is crazy enough to put money into a mutual fund that is buying stocks right now?"

The thought occurs to me that it is tax time. Now is when people who don't manage their own investments put IRA and 401k contributions for the 2008 tax year into their accounts. Most of that money goes into mutual funds that are required to invest it.

If the above is the case, then as April 15 approaches this new money will dry up and the bid will decrease. Hence, I am looking to build some positions in the broad index short etf's, like SDS, if the market continues to rally next week.

Excellent thesis Horsefish!

We also noticed the influx of MF money at the end of the year 08 (for those business owners funding simple IRAs), as well. We saw a little pop then once the money dried up on New Years day things went south.

I think you are on to something.:top:

[Florida]

Time to get out the purple crayon again. The downtrend that started on election day has not been broken. If you draw a line across the highs since then, we are right at the point of either breaking to the upside, or starting a downward move to continue the existing downtrend.

At this point, you can play it either way with tight stops.

Forget about all the hype and hoopla, let the charts tell you what to do.

As for me, "the trend is your friend", and I will look for the recent "rally" to reverse and continue the downtrend that has been in place. Of course I will be ready to reverse course if warranted, as a trend is only a trend until it is not.

[Mastajab]

This rally doesn't prove anything. This rally is built on stupid rule changes and short term tech.

It certainly isn't built on long term tech as Florida stated.
And it’s definitely not built on good economic news.

Later this month when banks quarterly reports come out the S&P will turn to the downside.

Unless they lie and say something good, because I'm thinking their quarterly report is going be terrible, but they might give some bullshit positive guidance. Especially, because M2M changes go into effect in the second quarter, so Ken Louis will say, "Next quarter we're going be positive, because we're gonna completely change our balance sheets in our favor, YAY"

[Screwball]

There was a guy on Fast Money Friday that explained the M2M rules were not all they were cracked up to be. He claims this will not help the banks as much as people think, as advertised on the surface.

I don't understand how it works well enough, so I have to rely on reports such as that, from the so-called experts. At the same time, I don't like to put faith (or money)on what the people (or guests) on Fast Money say either. Not that I dislike them, but they can be wrong too.

As a whole Friday, I think CNBC had their share of cheerleaders on, and Pasoni was really playing salesman. The more I watch that station, the more guilty I feel believing too much of what they say. As stated above, this rally is built on quicksand.

I worry that expectations have been lowered so much many of these companies will make or beat, but other indicators (jobs) continue to be pretty bad. I don't see any basis for the market to continue to go up. 20-25 percent in a 3 weeks to a month is a bunch.

Maybe I'm nuts, but when in doubt, I see what Roubini has to say, and he still isn't too bullish.

[Albert0373]

Unemployment zoomed to 8.5 percent last month, the highest in a quarter-century, as employers axed 663,000 more workers and pushed the nation's jobless ranks past 13 million. The hard times were only expected to get harder -- a painful 10 percent jobless rate before long.

The current rate would be even higher -- 15.6 percent -- if it included laid-off workers who have given up looking for new jobs or have had to settle for part-time work because they can't do any better. That's the highest on record for that number in figures that go back to 1994.

http://finance.yahoo.com/news/Unemployment-soars-to-85-pct-apf-14850511.html

Let me know when that gets back near 6%.

[Screwball]

http://www.bls.gov/news.release/empsit.t12.htm

U-6 not good.

[BuyOnDips]

The rally proves there are rallies in bear markets. :)

The unemployment rate is high and going higher. Housing prices are still falling with more foreclosures on the way. Many large banks seem to be insolvent. Credit card defaults are rising. U.S. office vacancies hit 15.2% and are still rising. Personal bankruptcies are getting near record highs. You are starting to see companies(besides banks) cutting dividends and have stopped buying back stocks. It appears to be survival mode time. And many companies are no longer giving any guidance for 2009 as they report earnings. That's a major warning sign for me. When lots of companies stop giving future guidance, then there's not a lot of reasons to be bullish in the next 6 to 12 months. This upcoming earnings season will be very interesting. Good luck to all.

http://finance.yahoo.com/news/Ingersoll-Rand-Faces-zacks-14800885.html

http://finance.yahoo.com/news/Manitowoc-retracts-2009-apf-14782349.html

[ZaNoob]

Do you think this is another game the market is playing? They are running this thing up so everyone else buys high before pulling the rug? M2m changes will make banks look very good on paper even if the underlying economy is getting worst. Make up can make a girl look very pretty.

[Florida]

They are running this thing up so everyone else buys high before pulling the rug?

Who do you think "they" is (or is it Who do you think "they" are?)

[pedrom727]

It's not a game or market manipulation, it's the natural way the market reaches its ultimate long term destination. Depressions, recessions, recoveries are never straight line affairs. They always involves counter trend rallies and retracements, some of which can be immense in size. There are always bulls and bears, when there are 2% S&P bulls (at the 666 low in the S&P recently) and sentiment gets very negative we nearly always get a bottom of some sort. Simple fact is when there's noone left to sell a vacuum is created and the result is the immense rally we've had (which will likely go much higher too). It was the same exact phenomenon at the top, nearly 100% were bullish and with noone left to buy, down we went. Is it the ultimate bottom? I don't believe so, this is playing out almost identical to the depression in terms of the structure and time frame of the decline. As a trader though, you cannot go against the near term trend for too long or you'll be slaughtered so I'm currently long.

[Gordo]

How does this make you feel pedrom?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOELPVQjPe5s&refer=home

[pedrom727]

How does a 100 pt down day make me feel? The same. Mayo is probably spot on in his analysis. That, however, doesn't mean we still don't have room to 1000 on the S&P before going lower. Probably takes til late May or June to reach that though so some sideways action and a correction of the rally is to be expected, I don't read that much into every single day's movement but rather the larger, monthly trends. I'm looking to buy on nearly every pullback and expect upside surprises in the short term. I will reassess when we reach 1000 and likely begin positioning short, analyzing the market as we go. I don't believe news affects markets to a large extent, they get where they want to go regardless and largely predict most stories before they come out. We broke above the channel line and various measures of sentiment shifted dramatically from oversold extremes, I'd expect the market to shrug off most bad news and continue to plow higher, albeit with a few near term set backs.