Magic Carpet ride

[Emini Maestro]

Quote from Mvic:

Why would there be a correction?

The fundamentals have not improved since before the DOW was at 6547. That is why. You are watching yet another bubble.

 

[swtrader]

Quote from wjk:

Just print some new money, legislate some stimulus, add a few well placed superbots, spin all econ data to be somehow positive, throw in daily pumps by various officials and network(s) that would rival a pink sheet penny stock fake news release and BAM!!! Instant super bubble!

Did I mention the main ingredient? Must keep that dollar down at all cost. It's only our savings that will be worthless when the Dow reaches the old highs.

the cruelty to older people with fixed income is breathtaking

the fed is basicly saying fixed income is a guaranteed loss, and 'equities' are a guaranteed win

 

[wjk]

Quote from swtrader:

the cruelty to older people with fixed income is breathtaking

the fed is basicly saying fixed income is a guaranteed loss, and 'equities' are a guaranteed win

Agreed.

I don't expect the oldsters that got screwed last year are anxious to invest in equities again, and most likely the ones that do will go in near the actual top for a second beat down.

 

[MarketOwl]

Quote from wjk:

Agreed.

I don't expect the oldsters that got screwed last year are anxious to invest in equities again, and most likely the ones that do will go in near the actual top for a second beat down.

So true. When those that sold late last year come back to the market when it is 500 SPX points higher than the bottom, they will get crushed again. Wall Street carnival games continue, only the suckers change. The carnival barker remains.

 

[piezoe]

Quote from MarketOwl:

Its a levitation act, this stock market. It feels unnatural, almost unbelievable. Why is the stock market going up while the economy is still in a deep recession and has 10.2% unemployment? How can oil be at $80 in this scenario when 3 years ago, with a decent economy, oil was at $60? Its hard to believe, so that's why we've seen the low volume. The buyers are not plentiful, for sure. But there are just so few sellers. Shorts are very reluctant to get their heads bashed in again. Those who don't believe, either sold already or are waiting for that elusive 8-10% correction to buy. So the rally goes on, until it exhausts itself by going too high and succumbing to the forces of fundamentals.

The market has not gone up a lot in constant dollars. Inflation is a primary driver of the markets and the markets are discounting future inflation because the dollar has been falling in value relative to other currencies. When the economy turns around and earnings increases exceed inflation you should see some growth in the market other than what can be attributed to a falling dollar. For now, the market is essentially trading with the dollar.

We are likely to have an up market in the latter half of 2010 because of the midterm election, so I would expect the dollar to remain relatively weak well into next year and perhaps weaken even a bit more --possibly to EUR/USD = 1.60-- in late summer-early Fall. Recent history shows that the market tends to go up before an election and gas prices tend to go down. (Goldman Sachs, for example, changed the waiting of gasoline futures in the GSCI before a major election, which had the effect of causing gas futures to be dumped and forced the price of gas lower. Or the party in power, for example, might release petroleum from the strategic reserve. That's happened too.) In the meantime, if the dollar strengthens, we could easily have a substantial pullback sometime between now and late Spring. This has a lot to do with the fed, and in recent years the fed has usually adopted policies favorable to the incumbent party before a major election. But anything can happen. But we should at least be aware of these factors that influence the market.