huge stock market rally is over for now!

Is the huge rally over for now?

  • yes, rowshan is usually right

    Votes: 110 34.2%

  • No! more upside ahead

    Votes: 113 35.1%

  • I don't know/I don't care/stop with your polls

    Votes: 106 32.9%
  • Total voters
    322
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I can remember in 2006-2007 all the chatter about how low the Vix was, and this was the time to sell.

The Dow went from 11000 to over 14000. I gave up using put call ratios and the Vix. Just focus on the price action thats what puts money in your pocket.
 

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Quote from Mvic:

Sox is not confirming this break out and has actually broken its UTL from March low, nor is the action in some of the high beta names. Volume is unconvincing. Too much artificial support for the market, too much issuance coming and what is hitting the market is being flogged at below market prices, rates are heading up, gas prices heading up fast hitting an already weak consumer, taxes heading up.

Most worrying is the fact that commercial defaults and BKs are at record levels and accelerating. CRE has yet to take the write downs that have hit the banks from the housing market (these are coming in 20-40% below where the banks are carrying these assets) and the jumbo write downs are really just starting on the residential side not to mention the shadow REO inventory. The unemployment rate may be declining at a slower pace due to government hiring (the least productive type and poorly paid) but it is still declining at a rapid pace (imagine how a -500K number would be reacted to in any normal year!), the ramifications on this huge and understated number of unemployed does not seem to be factored in to me. I do not see any scenario where these people get hired back in the next 12 months. Without some positive uptick in employment I have a hard time seeing any second half recovery.

Basic TA on the weekly charts all seem to indicate a correction in the next two weeks and June is the month when a great deal of damage is usually done in bear markets. Sentiment indicators are getting extreme.

Oh and sell in may and go away :D
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Agree.
Nascrash led it up...........where do we go from here?
 
"I feals very stretched, but I remember in 2003 I felt this way and the damm thing kept rising. bearish patterns, divergences blown to pieces."

Well if this has any correlation to 2003- big runup started the day after Memorial Day holiday, ran straight up for 10 days, started pulling back and traded up and down and sideways , with a fair amount of pullbacks through the summer.
 
Next week is Options Expiration. I would expect prices to hold up until that's out of the way. A logical place for the current trend to halt would be at strong resistance of the Jan 2009 highs -- somewhere near 940. We are close.
 
There are quite a few bullish headlines. Regular Joe may decide to finally put his money to work in the market. The coming week should be interesting.


Emerging-Market Stocks Rally to Seven-Month High; Brazil Rises
Bloomberg - ‎May 8, 2009‎

MARKET COMMENT: London Stocks End Up Near 2009 High
Wall Street Journal - ‎May 6, 2009‎

Wall Street stocks finish week on five-month high
National Business Review - ‎May 8, 2009‎
 
I for one have been quite bullish on the vacuum up as in my thread the past 7 weeks. More for technical reasons than anything else. I am a bit concerned in the short-term for the following reasons:

1) Sell the news in banks. Now that all the 'unknowns' are out, as in the results of the stress test, history tells us that the 'smart' money will no longer chase the unknown. Did not like the action into the bell on Friday. The banks did a rip largely due to reweightings in WFC and MS, about 38mm of each to buy on the bell.

2) As mentioned in this thread by MVAC, the SOX index action has been quite negative in an up tape. MSFT, CSCO, AAPL, and the semi's in the SOX have turned south and can't seem to get out of their own way. They led the way up with NDX having been the first to go positive on the year several weeks ago.

3) The 30 yr. bond auction did not go well and in fact higher rates are soon to be upon us. The gov't can do little about this with the Fed rate at zero and the Treasury having to sell more paper to fund itself and aggresive stimulus. As Warren Buffet implied, increasing money supply will be quite dangerous and could lead to dollar decline and inflation/stagflation.

4) Now that the quants have largely covered, you'd have to think, the worst thing that could happen to them in an already abysmal year, is for the market to turn south now. Murphy's Law; isn't this what always seems to happen?

IMHO, the much anticipated drawdown could be as violent as some of the updrafts as of late. Think this might actually be healthier for the remainder of the year than if we just keep up the current pace though.

-Tide
 
Quote from Tide31:

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4) Now that the quants have largely covered, you'd have to think, the worst thing that could happen to them in an already abysmal year, is for the market to turn south now. Murphy's Law; isn't this what always seems to happen?
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what's the evidence that the quants are really suffering? can this be quantitated in some way? how does it compare to an average drawdown for the quants from the previous years.
 
Quote from fx1ss:

which level do you think DOW will retreat to?
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Thanks! I forgot to ask the same question :)
Personally (as a guy who totally agrees with this thread's subject) I have a target between 777 and 800 but our dear guru may have a better idea and I would love to know it!

This applies to the SPX of course
 
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