We will rally and then re test the bottom

[ironchef]

Stock prices just got to fair valuation WITHOUT an earnings decline. It was historically overpriced!

Even if Treasury yield is negative, 10 year bonds pay 0.5% and 30 yr bonds paying 1%?

 

[BurtBurton]

Even if Treasury yield is negative, 10 year bonds pay 0.5% and 30 yr bonds paying 1%?

Do you think interest rates can continue to stay as low as they are?

 

[ironchef]

No doubt.....but I don't think the heavy hitters will start hitting the buy button en masse until valuations become underpriced.......that's what has historically happened in most bear markets.

On Monday: ABBV @ $63, had a PE of 12 and paid a dividend of > 7%; BRKB @ $160, had a PE of 3.8, Yes, their PE was funny because of the new marked to market security GAAP rule, but 3.8??? I don't think these were way overpriced.

Maybe @dozu888's pro boys stopped shaking on Monday? I don't know, I am just an amateur retail following him down the rabbit hole?

 

[ironchef]

Do you think interest rates can continue to stay as low as they are?

I don't know, you should ask the experts, not me. But Europe (Germany) has negative interest rate since 2009.

 

[ironchef]

fair p/e is 50. minimum.

I follow you but I think you have gone too far. Takes 50 years to get my money back?

 

[farmerjohn1324]

I think you're seeing a short term bump in sentiment. Look at all the things that have happened in the past few days. Italy's numbers are finally coming down; Our own government is talking about ways to send people back to work, and the federal government just issued a 2T stimulus package (the largest in history). Add to that the market just had the quickest and most rapid sell-off in history.

There was bound to be a relief rally.

Here's what's not captured in the rally the past few days. We haven't even begun to understand the economic impact of this shutdown. We just saw last week's unemployment numbers before the $%^& really hit the fan. More and more people (including office personnel) are going to be laid off in the next couple weeks. That is going to drag on everyone's sentiment.

We are going to start hearing rumors of bankruptcies as companies that depend on consumers for cash have evaporating balance sheets (retail, airlines, automotive, food service). After that the cash flow is going to make its way down the supply stream as the manufacturers as companies on net 30, net 60 or net 90 start failing to make payments (clothing manufacturers, oil and gas distribution, secondary and tertiary automotive suppliers, food packaging, retail food distribution).

We are only at the beginning stage of this recession, and I have a feeling it's going to be pretty painful. The best case scenario is that the US is somehow insulated from how this spreads in Europe because we all drive in cars and live farther apart. In that case, maybe we are out of this in 4 weeks. More realistically, I think we follow the trend of Italy and we have to shut down for at least 6-8 weeks.

And what happens after that? Does everyone bust out of their doors and rush back to their jobs that fired them only two months ago? Not likely.....the spigot will slowly turn on as companies try to gain some sense of normalcy after the biggest economic pause ever.

Then of course, we might have flare ups in the fall......

As of today, the USA has more confirmed cases than any other country.

And we are at our daily high for new cases. No sign of a slowdown in infections yet.

 

[dozu888]

I follow you but I think you have gone too far. Takes 50 years to get my money back?

you will get mucho free virgins very soon.... this gone be a V shape rise because once them boys collect the chips, and the dumb herd slowly realize this corona is nothing burger, them boyz gone lift it up quick so the herd cannot nibble slowly at cheap.

 

[tommcginnis]

Would have to see the entire history to make conclusions and commit money. If all traders need to make a lot of money is an MACD, then why do funds spend so much money on much more expensive research to make investment decisions?

ET180, you are *way* smart enough to answer your own question: if you had a 50% chance of making $1, and a 60% chance of making $1, and a 62.5% chance of making $1, and a 62.998% chance of making $1, which would you prefer?

Right now, everyone who trades trends via specific rules ("algos" ) has a new environment over which to lay their algo performance -- an opportunity to observe/test/tweak/re-test once again. It's Party Time meets Midnight Oil time. It's a great time to be a nerd, I guess.

Going for that 0.002%.

 

[KCalhoun]

I thought market would be weak until the death rate stops falling. Even with Fed intervention. So you're short here?

Yes, I bought inverses premkt for weekend hold