Ewj: elliott wave

Market getting hit a bit here at 3:15PM due to Meredith Whitney ( the banking analyst ) talking about how the earnings power of the banks has been dramatically reduced (as well as asset value ) and how most are trading at 2x tangible book value. She says that they are "manufacturing" earnings and their earnings are very low quality . . . still sitting on toxic "rotting" assets. People buying the banking stocks at these prices ( JPM at 30x EPS ) will be in for a rude surprise. Right now, she wants to be short consumer retail stocks . . . Banking share might be able to hang on for another quarter or so, she says.

On CNBC.
 
Interesting reading from Barry Ritholtz:

http://www.ritholtz.com/blog/2009/04/great-depression-rallies/

Analysis of "Great Depression" bear market rallies . . .

Richard Russell (Dow Theory Letters): Are we in a bear market rally or a new bull market?
“(1) The market turned up in a V-shaped reversal off the March 9 low. However, almost all bull markets start with a period of accumulation. This entails a sideways move, sometimes taking weeks or even months. Or it may require a non-confirmation of the Averages as per December 1974. At the March low, we saw neither - no indication of accumulation. And that bothers me.

“(2) At the March lows, we did not see the ‘great values’ that usually accompany major bear market bottoms (i.e. P/E’s in the 5-8 area, average dividend yields of 5-6%).

“(3) The market was severely oversold at the March lows, a condition that often sets off a ‘relief’ (‘let off the pressure’) rally. The advance was probably triggered by the severely oversold condition of the market.

“(4) The one thing a money-manager cannot afford to do is be on the sidelines during ‘what could be’ a major rally. Once the market started up from the March 9 low, many money managers leaped in. The big short positions were immediately squeezed. The rise became a momentum advance. Retail buyers moved in, many trying to retrieve some of their brutal losses.

“(5) The rally moved up ‘too fast’ - action more typical of a bear market rally than the slow, plodding rise that is characteristic of the advance in a new bull market.

“(6) Two groups that led the rally were Financials and Consumer Cyclicals. Interestingly, these two groups contained respectively 5 billion and 2.7 billion shares sold short. This suggests strongly that a significant part of the rally was fired up by short-covering in these two groups (thanks Alan Abelson for this information).

“(7) Many investors and analysts turned optimistic after the market had rallied for only a few weeks. At true bear market bottoms, investors remain stubbornly sceptical or bearish for months after the bottom. Remembering 1974, people were actually angry when I turned bullish at the bottom. I was receiving hate letters and subscription cancellations.

“All of the above have kept me skeptical and cautious about this rally.”

Source: Richard Russell, The Dow Theory Letters, April 20, 2009.
 
GM falls to 76-year low as execs sell stock
GM (GM, Fortune 500) is headed for either a bankruptcy filing or an out-of-court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.
http://money.cnn.com/2009/05/12/news/companies/GM_execs_sell_stock.reut/index.htm
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Posted by mu200411 on 08-17-07 04:38 AM:

If he did, he would have a more optimistic view. He may forecasted that Cycle Wave IV would be equal to Cycle Wave II which dropped 43% from the January 1966 high of 1001.11 to October 1974 low of 570.01 or 50% or 61.8% (a fibonacci retracement).
So the end of Cycle Wave IV may be forecasted to drop 50% from ~10600 or ~14400 to ~5300 or ~7200 in 8 years. Cycle Wave V may be equal to Cycle Wave I and rise to 33,000 or 44,800 in 1949 + 71 = 2020, the time when oil reserve is very low. Boeing Co., Exxon Mobil Corp., General Motors Corp. and United Technologies Corp. might have gone out of business.
 
Lots of secondary stock offerings in the wings.

We have a slow "creeper" to the downside here thus far. Natural resource stocks getting hit pretty good and reversing from the positive opening.
 
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