US Economy is moderating, but Dow has new record high everyday, why?

If you know how to read a chart, then you can plainly see that the charts are getting tired. The Naz was the first to show a little wind, but now the S&P will start to show it and so will the DOW soon enough. Usually the NAZ starts to show it before the other indexes because it contains high pe growth stocks that are usually the first to feel the pain.

The market is focused on the ten year (TNX). Its not focused on oil and its not focused on phantom buybacks or corporate profits. Its not focused on whats happening in the middle east.

Bernanke doesnt want another bubble of any sort. He feels the current interest rates are just fine. While all of the gurus are predicting substantial cuts in the interest rate, I really dont think it will happen.

Smart money is now selling. The charts will detoriate further until February when CNBC will declare that the correction is over. Then in April and May the waterfall selloffs will begin. This is how ALL bear markets, panics, crashes, etc. have begun.

Im going to say this once if your long. Well, its really on a case by case basis. However, this is a good time to get out of the market. Even shorting is a risky venture. Look at the short squeeze on BRLC the other day.

Get out now with your loot and come back during the summer or risk getting yourself caught up in a waterfall selloff.
 
Quote from kashirin:

Is it a joke? Central banks don't play with stocksor futures
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Are you joking? China has trillion dollars you think they just buy bonds with that?

Take a look at the tic data and look at US equities... you telling me all that is individuals overseas? Do a little homework.
 
no china is not buying trinkets they are building and buying weapons WITH THOSE DOLLARS ! whatever happened to the consumer driven economy ? they {the consumer} are ALL SPENT ! and used ! by who ? our government . do you remember when?? {2002} do you all remember?? mr.president was telling us on the T.V. for the people {consumer} to go out and spend to get the economy jumpstarted again. and the FED flooded the economy with cheap {interest} easy money. and your consumers did ! now who is going to drive the economy ? the corporations ? not quite . now if 2/3 rds of the economy is consumer driven and they {consumer} are all used up and i mean literally used ! who is left ?? AND DONT TELL ME GLOBAL BULLSHIT EITHER !

NOW I WANT SMART REPLY'S . NO EDUCATED DUMBSHIT'S !

peace ,
bgp
 
Part of the answer to threads question:

NYSE, etc. may NOT be at all time high as its value is given by the number of dollars required to buy the shares included in the index. If each dollar is worth less, then the index is going to be higher, even if the total value of the shares in it (say in Euros) is unchanged.

I am retired and living in Brazil. I accumulated SBS, the ADR of Sao Paulo's water & sewer co. (perhaps the world's largest, BTW) between $4 and $6 about 4 or 5 years ago and SBS is now trading in the 30 to 35 dollar range (last time I looked) but not up 700% in the local currency (Real, R$).

Half of my dollar gain is due to fact dollar will now buy only about R$2.14 and back when I was buying dollar bought approximately R$4. I expect the dollar to continue sliding downward in value so by end of 2007, I expect that the DJ index will be near 1500 but perhaps worth less than today, in Euros etc.

As you surely know, shares represent real assets and dollars mainly the activity of printing presses. When these presses are very active, (to pay for wars, bribe increasingly wary foreigners to invest via greater interest payments, etc.) then the Dow Jones index, the NYSE etc. will naturally be "going higher," even if the value of Ford and some other real US assets is falling. etc.

Fortunately, the US still has some assets (to sell to foreigners getting out of dollars.) so some that get printed will be used to buy asset in US (US is “selling the farm” one piece at a time.) and this may* reduce the upward pressure on interest rates required to keep foreigners financing the debt.
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*When Euro buys oil directly, the US will be forced to sell more real assets to soak up the dollars no longer held by both centeral banks and individuals. Current the most profitable US "export" is Treasury Notes - a few cents to print one worth at least $10,000.00 - too bad they are getting harder to sell.
 
Quote from bsparkyman:

Will recent drop in oil be a bonanza for consumer spending and corporate profits? When energy went up the media went crazy for the spending and profit squeeze, why not now the opposite that evergy is falling? How can walmart not project sss's #s growing faster than expectations with oil falling? They blamed the shortfall on higher energy?!!!!

On the other end of the spectrum alot of liquidity driving lbo's and venture cap, and commodities chasing returns has come from mid east oil revenue. Will falling energy dry up this liquidity?
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The energy argument is interesting, media still seems to be fixated on the concept of rising oil prices. For example, I watched CNN's "In the Money" this weekend (not the best show, but I sometimes catch it), and they interviewed an energy analyst. The analyst predicted that oil prices will decline to approx $20/barrel (I cannot remember exact timeframe), and they laughed at him, despite a variety of good arguments that he presented.

I personally found it to be quite interesting that this analyst was predicting significantly lower energy prices, given that we generally see the talking heads on TV assuring viewers that energy stocks still remain an excellent investment, with little risk.
 
The US main indexes are not some sort of economy tracker in which one sees how the local economy if faring. In today's economy, the main stock indexes will go up or down in tandem. technically the world's index correlation has increased from around 50% in the 80's to around 95 nowadays. That's because the index itself is comprised of global corporations spanning multiple products across dif markets and geographies and thus, even if US is slowing down, its main companies would continue to reap the rewards of phenomenal growth overseas. Just imagine the effect of lower sales in mainland when compared with massive growth in China. All Dow components are reaping extraordinary rewards overseas which leads to stock price appreciation, and there's indication that won't change in near future. So, basically, expect the DOW to change direction when the world economy makes a dramatic move in its course. With emerging markets powering the world economy and the growth opportunities ahead, the most viable and efficient companies will continue to grow independently of its origin.
 
Very dumb comment. Internet stuff in late '90's moved more in 1-2 days than retail or 95% of the rest of this BS stock market does in 1-2 months now! So what if the Dow makes some minuscule "record" daily if it ends up peanuts. Yeah, compared to your band CD rate it's a little better but this bs rally only serves to draw in amateurs like you. Bag holders anyone?

Quote from Happy Hopping:
Some of these sectors, for e.g., look at retail sector, factor in the gain of those dept. store per year, then look at their 2006 gain, I mean, they are jumping like internet stock in the late 90s.
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Quote from bgp:

no china is not buying trinkets they are building and buying weapons WITH THOSE DOLLARS ! whatever happened to the consumer driven economy ? they {the consumer} are ALL SPENT ! and used ! by who ? our government . do you remember when?? {2002} do you all remember?? mr.president was telling us on the T.V. for the people {consumer} to go out and spend to get the economy jumpstarted again. and the FED flooded the economy with cheap {interest} easy money. and your consumers did ! now who is going to drive the economy ? the corporations ? not quite . now if 2/3 rds of the economy is consumer driven and they {consumer} are all used up and i mean literally used ! who is left ?? AND DONT TELL ME GLOBAL BULLSHIT EITHER !

NOW I WANT SMART REPLY'S . NO EDUCATED DUMBSHIT'S !

peace ,
bgp
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stop spending and increase your saving rate. This is how the giant will tumble. there is too much external interests polluting the political agenda in the US. just imagine, china is powering their economy, they have almost limited man power, they're attracting all sorts of international investment and in addition they dont need to pump consumption to grow the economy at 10% level. On the other hand, the US has to force consumers to buy what they dont need or want and attack a couple of countries just to keep the economy growing. just imagine the kind of economic imbalance is being craved here. going forward, who cares about the american consumer? who cares about the twindeficits? as long as we have a top of line SUV and the latest gadget on our home it is ok. now the US corporations couldnt care less about the economic policy either, they are more interested in assuring they grab a huge market share abroad, so they continue to dominate their respective markets. as long as people go to McDonalds in Beijing, who cares about the american consumer or what the president agenda is? sorry, i think the global bullshit is what pays off handsomely.
 
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