Stocks continue to rally...DOW over 8000 points!

People will keep making the same mistake all over again to regard the market indexes as the Thermometer Supreme to read the temperature of the economy. That's far from the truth. The widely watched index, like the Dow, is shaped by the way traders interpret various changes in the global environment of economy and finance. "Traders" means a population of investors and speculators. When economy is stable and modestly growing, the number of investors increases, whereas in the time of uncertainties, the investors and those who buy and sell stock looking at the dividend column leave and speculators take over. The heavy volume in the first and the last 30 minutes of daily trading sessions and the wild fluctuation in loses and gains is the indicator who is playing the sell-high-buy-low game. Or do you think that GM stock makes an occasional top gainers list because the traditional investor is back? Haha.

When a member of a chronically ill banking industry shows a tiny improvement, the news is overblown to inflate the figures, so the excess margin would be sold later according to the rule of the game.
finance.yahoo.com...

The mid-term gains are made by sucker investors who believe that the market has bottomed out and are looking for a bargain.

There is lots of action in the market based on info that is not available for free. Anything that is worth anything is usually being sold.

The market indexes are not the yardstick made to measure economy down to 1/128 inch.

reply to post by stander


Actually the reasons the financials have gained so much is because they were way oversold in the first place. Most stocks now are oversold and the low price already has the bad news already reflected in their prices. Take Alcoa for example. It came out with its earnings on tuesdays and posted a loss. On thursday it was 1$ higher then it was on tuesday. This is because the price already reflected what investors already know. That is why when any positive news comes out you will see massive gains. This market is way oversold. When we pull out of this recession it will be normal for some of these over sold stocks to see 1000% gains from their lows. If you dont think BOA is going to be a 40$ stock again in 3-5 years you are naive.

Originally posted by tide88
reply to post by stander

 

Actually the reasons the financials have gained so much is because they were way oversold in the first place.

Well. did I say anything on the contrary?

The mid-term gains are made by sucker investors who believe that the market has bottomed out and are looking for a bargain.

The WSJ had this to say:

online.wsj.com...

Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won't be until the second half of 2010 that the economy recovers enough to bring down unemployment.

Gross domestic product was predicted to contract in the first and second quarters of this year by 5.0% and 1.8%, respectively, on a seasonally adjusted annualized rate. A return to growth -- a modest 0.4% -- isn't expected until the third quarter. In the fourth quarter of 2008, the most recent period for which data are available, the economy contracted 6.3%.

"The end of the decline isn't the beginning of the recovery," said David Resler of Nomura Securities Inc. "It's like a boxing match. Even if you win the fight, it's not going to feel as good when you get out of the ring as when you went in."

This is particularly interesting:

The economists' forecasts indicate that the peak in the unemployment rate is likely to coincide with the midterm elections -- possibly bad news for Democrats. Even if the economy is growing, Americans still will be feeling the effects of the recession and could blame the incumbent. For example, when George H.W. Bush lost the presidency in 1992, the economy had been out of a recession for more than a year, but the unemployment rate didn't peak until June, and there was slow growth through the election.

Anyone for Obama being a one-term President?

Even when the economy stops shedding jobs, the unemployment rate is likely to remain elevated for some time. "The unemployment rate isn't going to recover, because you have to get back everything you lost and then some," said Joseph Lavorgna of Deutsche Bank Securities Inc. He estimated that the economy would have to grow an average of about 4% for six years to get back to the sub-5% unemployment rates seen in 2007.

...so whilst the markets recover, the rest of the country won't. Could this cause a spiral of decline as people slowly start going bankrupt and start defaulting on things as they run out of money? 6 years is a long time without any income.

I'm not so convinced this is going to go how they think it will. People have borrowed far too much (more than any other time in history).

It's not looking too good for Japan, either:

/d2moyr ( marketwatch.com )

But in Tokyo, it was a different story.

Shares of Sumitomo Mitsui (SMFJY: 2.87, -0.55, -16.1%) (JP:8316: news , chart , profile ) plunged 13.9%, retreating as the bank said it now expects to post losses, citing rising credit costs and impairment losses.

Other banks also declined, with Mitsubishi UFJ Financial Group (MTU: 5.24, +0.30, +6.1%) (JP:8306: news , chart , profile ) dropping 1% and Mizuho Financial Group (MFG: 4.22, +0.24, +6.0%) (JP:8411: news , chart , profile ) sinking 9.6%.

The UK is in for quite a ride, too:

news.bbc.co.uk...

"If the 1980s profile were followed, output would continue to decline for up to another year and it would take two further years before the level of output enjoyed at the start of 2008 would be reached again," said NIESR director Martin Weale.

[edit on 10-4-2009 by mirageofdeceit]

[edit on 10-4-2009 by mirageofdeceit]

I'm convinced the global elitists got what they wanted (monetary control on an international level) and we will not see worse then we have.

I hope this is not a stimulus bubble, I hate that word bubble because bubbles usually pop. Here in Washington we are sitting on a nice tech industry bubble that has kept our state relatively unscathed through this recession. The company I work for, though finishing 08' making over 50 million in profit, cut our pay to a flat rate and reduced our hours. No more then 1 week after doing this we gained several new contracts and started training new classes to support these new contracts. I don't think we here in Washington are ever going to have it too bad. But my heart goes out to the other states not weathering as well as us and I hope the worst has come to pass...for now.

reply to post by Ciphor



That is something to worry about. Even if the stimulus creates 3 millions job, these jobs are just temporary. Unless the economy rebounds extremely strong in three years we will be looking at another bubble that will burst.

My worst fears are that we have finally reached more population then can be supported. Sort of like peaking, now we begin the tumble till we get back to a point we can support. It is something that is inevitable when an object on a space continues to grow and the spaces size stays constant.

Until the people learn that this credit/debt system does nothing but screw the common person over this economy is totally doomed. People purchase things they cannot pay for outright by utilizing what amounts to fictitious money, then pay more than the initial cost over time; often for an item that loses value faster than a impaled victim loses blood. Sad part is even a collapse wouldn't be enough to teach folks that the system we use now is horribly imbalanced against us.