The Wealth Effect from this Rally?

H

heynow

Dow has hit 12000. Corporate profits at record levels. Valuations not yet in bubble territory yet. And if you look at the long term chart for the Dow, this looks like a real breakout. It just doesn't feel like a real breakout because of the geopolitical news, and the deflation in housing.

I think this rally can easily continue to 'shock and awe'. Because bearish sentiment still pervasive dispite this 4-5 year bull market. IWM QQQQ EEM still haven't recovered fully from the May selloff.

My view has changed. I think the Wealth effect from this rally if it continues can easily prevent a recession. I mean if everyday Katie Couric has to say "Dow hit another all time high today" - that's bullish for consumer sentiment despite housing.

Since 1999-2000 was the high point of the last bull market, I'm thinking 2009-2010 will the the high point of this bull market - Since its rare for the market to not be at new highs in any ten year period. Dow could easily be at 14-16k in 09-10 even with PEs below 20. Then perhaps come down to 10-11k. Then a real speculative market bubble can develop sending us soaring. This all speculation but hey I'm a speculator.
 
What's a good site to get P/E information on the indexes?
I see the P/E for SPY at 14.8 now. Is that reliable?
Furthermore, don't bull markets usually top out at 20+ P/Es and really bullish sentiment. Not there yet.
 
I have no idea what's going to happen days, weeks, nor months from now. Nor do I care.

I just play the charts according to what they are doing NOW.

I'm not really seeing the reason for this kind of long-term speculation, but maybe that's just me.

RoughTrader
 
Quote from heynow:

Dow has hit 12000. Corporate profits at record levels. Valuations not yet in bubble territory yet. And if you look at the long term chart for the Dow, this looks like a real breakout. It just doesn't feel like a real breakout because of the geopolitical news, and the deflation in housing.

I think this rally can easily continue to 'shock and awe'. Because bearish sentiment still pervasive dispite this 4-5 year bull market. IWM QQQQ EEM still haven't recovered fully from the May selloff.

My view has changed. I think the Wealth effect from this rally if it continues can easily prevent a recession. I mean if everyday Katie Couric has to say "Dow hit another all time high today" - that's bullish for consumer sentiment despite housing.

Since 1999-2000 was the high point of the last bull market, I'm thinking 2009-2010 will the the high point of this bull market - Since its rare for the market to not be at new highs in any ten year period. Dow could easily be at 14-16k in 09-10 even with PEs below 20. Then perhaps come down to 10-11k. Then a real speculative market bubble can develop sending us soaring. This all speculation but hey I'm a speculator.
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Its all about 2010 - 2011. Whatever is going to happen, will happen then. Not that I have any idea what it is, although my suspicion is that it is nothing good, but that's WHEN it will happen. (c.f. demographic trend theories).

Until then, why not enjoy the ride. Particularly if markets behave irrationally. Like they are now. Might have been nice to have shorted the dot bombs, but if you didn't pick the top or do it on the way down, it would have been pretty painful. Relax. Things didn't completely crap out this summer, so being that we are already halfway through october and hitting new highs on good earnings, its not likely we do so in the near term.

I have considered your point of view also, but have not yet decided the larger trend. Time will tell, won't it?
 
Quote from myminitrading:

Pay no attention to the inverted yield curve. Just close your eyes and it will go away.
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It's anyway bullish for stocks, as long as it remains inverted...
 
To many bulls out there. If this was June or July these kind of opinions would not even make it to this forum. After seeing the run this market has had, many think now anything is possible. Every talking head continues to talk about DOW 13,000, 14,000 and even 15,000. Too many are getting ahead of themselves.

The s&p hasnt seen a 1% pullback in nearly 70 trading days. Talk about overbought. I think in order to keep this bull moving there has to be a minimum of a 2-3% pullback. Every bull was crying at around DOW 10700 when conditions read oversold. Today most charts are showing overbought conditions. I would be extremely bullish if it were not for the housing sector falling apart. This could lead to a recession in mid 2007.
 
Quote from myminitrading:

Pay no attention to the inverted yield curve. Just close your eyes and it will go away.
More...

MMT - your response dissapoints me. I was going to name this thread "The Land of Perfect" in your honor. Now your quoting "inverted yeild curve"? Don't tell me you're going over to the dark side, which is the short side in this land of perfect.

The bull market hasn't even begun yet. We've seen P/Es decline for 5 straight years. We're just getting started.

http://www.bullandbearwise.com/SPEarningsChart.asp
 
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