I'm FULLY CONVINCED that the market has finally recovered
- Thread starter luckylee
- Start date
Quote from luckylee:
No I'm serious. You'll see tomorrow it will go up and up and up.
I put my money where my mouth is. I bought UYG, nice > 8% gain in a day
The fed is on our side. Don't fight the FED!
Typically after a large uncoiling of volatility like we saw yesterday the market will trade back and forth in a range for the next day or so. I do agree with you that we might be out of the woods for the time being, but I'm not as convinced as you that it will be sustainable.
I am neither a perma bull or bear, but I have a really hard time thinking the economy is out of the woods.
Why? Massive debt, especially that on the consumer level. I am just wondering from a fundamental view, where the growth is going to come from?
90's: tech/dotcom boom
2002+: housing led expansion
Now? It certainly won't be consumer led until some of this massive debt gets paid down on credit cards, homes, etc. Look at a chart of consumer debt to income and it has gone parabolic. Major bubble. Only an adjustment in this level, or long term low interest rates will help this situation. If we start growing economically, i-rates are gonna rise.
So, where is the growth going to come from my bullish friends? And please don't say exports. That's a drop in the bucket for the USA.
A "Green Tech" revolution would do it, and so would a nano tech explosion. Both a ways off though.
My prediction: slow or zero growth on ave for a couple years, and the implosion of the Chinese markets somewhat after the Olympics (topic for another thread). I don't see a really deep recession, but I see a long shallow one, depending on your definition of recession. The FED will keep interfering to keep it mellow, but extended in time.
Trading wise, we are just in a big 'ol range. Rallying now, but in a month the opposite will probably be true.
That's my 2 cents.
Jay
Why? Massive debt, especially that on the consumer level. I am just wondering from a fundamental view, where the growth is going to come from?
90's: tech/dotcom boom
2002+: housing led expansion
Now? It certainly won't be consumer led until some of this massive debt gets paid down on credit cards, homes, etc. Look at a chart of consumer debt to income and it has gone parabolic. Major bubble. Only an adjustment in this level, or long term low interest rates will help this situation. If we start growing economically, i-rates are gonna rise.
So, where is the growth going to come from my bullish friends? And please don't say exports. That's a drop in the bucket for the USA.
A "Green Tech" revolution would do it, and so would a nano tech explosion. Both a ways off though.
My prediction: slow or zero growth on ave for a couple years, and the implosion of the Chinese markets somewhat after the Olympics (topic for another thread). I don't see a really deep recession, but I see a long shallow one, depending on your definition of recession. The FED will keep interfering to keep it mellow, but extended in time.
Trading wise, we are just in a big 'ol range. Rallying now, but in a month the opposite will probably be true.
That's my 2 cents.
Jay
Funny, but I've been looking at that same chart for a couple weeks now, and then scaling it back to the peak in March 2000 which looks quite similar. If the impact of the credit crisis (bubble?) is anything like the tech bubble, and that certainly doesn't seem to be much of a stretch, it seems unlikely that we're out of the woods so soon. After 9/11/01, S&P recovered somewhat, but then it dropped all the way to below 800 by July 2002, again that October and a third time in March 2003.
I'm not saying I expect it to drop that far, although nothing says it can't, but it wouldn't surprise me if the S&P dropped well below 1200 (-10% or more) in the next six months or so that it takes for all the Fed's gymnastics to take effect.
Just my humble opinion, of course....
I'm not saying I expect it to drop that far, although nothing says it can't, but it wouldn't surprise me if the S&P dropped well below 1200 (-10% or more) in the next six months or so that it takes for all the Fed's gymnastics to take effect.
Just my humble opinion, of course....
Far too much of a stretch. Look at the Dow during the tech bubble. Not even similar to the losses the Nasdaq and S&P got hit with. Why? Because the Dow wasn't oversaturated with Tech stocks. Nasdaq on the other hand...
Bubbles will trigger a slight reactionary effect in outside markets, like commodities and the Dow during the tech burst, but overall they aren't affected nearly as much as the market that triggered the bubble/burst in the first place. Hence, this isn't going to look like 2000-2002 anywhere but in the housing/credit markets. Everything else will look more like the Dow 2001-2002.
Are you saying that the S&P was also over-saturated with tech, hence its 50%+ drop? Or that the 30 Dow mega-caps will be no more effected by a general financial crisis than they were by the tech bubble bursting? Even if that's true, what about the rest of the market? And even if that's true, that's almost 40% drop in the Dow from the peak:
NASDAQ High, March 2000: 5132.52
NASDAQ Low October 2002: 1108.49
Change: -78.4%
S&P High, March 2000: 1553.11
S&P Low, October 2002: 768.67
Change: -50.5%
The Dow peaked a little earlier in 2000:
Dow High, January 2000: 11750.28
Dow Low, October 2002: 7197.49
Change: -38.75%
A similar 38.75% drop from last October's high in the Dow of 14198 would leave the Dow at 8,696.37.
That's 31.4% lower than today's DJIA of 12674.31.
BTW, a 38.75% drop from last October's high in the S&P of 1576.09 would be 965.35. Of course, a 50.5% drop like 2000-2002 would be far worse (780.16).
I'm not saying that I think it will necessarily get that bad. I'm just saying that losing another 10% or even 20% on the S&P over the next six months isn't hard to imagine at all.
NASDAQ High, March 2000: 5132.52
NASDAQ Low October 2002: 1108.49
Change: -78.4%
S&P High, March 2000: 1553.11
S&P Low, October 2002: 768.67
Change: -50.5%
The Dow peaked a little earlier in 2000:
Dow High, January 2000: 11750.28
Dow Low, October 2002: 7197.49
Change: -38.75%
A similar 38.75% drop from last October's high in the Dow of 14198 would leave the Dow at 8,696.37.
That's 31.4% lower than today's DJIA of 12674.31.
BTW, a 38.75% drop from last October's high in the S&P of 1576.09 would be 965.35. Of course, a 50.5% drop like 2000-2002 would be far worse (780.16).
I'm not saying that I think it will necessarily get that bad. I'm just saying that losing another 10% or even 20% on the S&P over the next six months isn't hard to imagine at all.
Funny, Over the last several weeks, I have come across several bulls at different party's/function's. I have asked them exactly this, "where is the growth going to come from". Not a single one could answer that question. It is just a pavlov dog response to always be bullish I guess.
I still have yet to see anyone on ET give a blueprint for growth now either. All I have seen is the calls for the bottom being in.
Dow 9,000? Thats not gonna sell a lot of books... 8-15% in next 6 months? Maybe. But definitely not 30 or 40%. Not in 6 months anyway. If it tumbles further it will be a steady pace, but the first 2-3 months of the next bull rally are going to wipe out the last 4-8 months of the bearish conditions anyway.