Bottom Callers Run Rampant
Last week, I questioned the conventional wisdom which claimed that there was Not Enough Bullish Sentiment?
It seemed that there were plenty of Bulls who looked at the 15% pullback in the S&P500 as an ordinary dip-buying opportunity.
In a moderate recession, an 85 day, 15% drop would likely be insufficient to reflect the changes in both growth and earnings -- much less a deeper, more protracted recession.
The counter-argument is that the Fed has flooded so much cash onto the system, the recession no longer would matters.
Looking from a sentiment perspective, its hard to say that the we've seen the sort of fear that typically accompanies a lasting market bottom. There's still plenty of speculative juice around. Consider these headlines from over weekend:
• Barron's: Are You Ready for Dow 20,000 (this year!)
• Vince Farrell on We've Seen Our Bottom
• Barron's cover story: Hitting Bottom? Several Banks and Brokerages Are Ready to Pop Up for Air
• Jim Cramer on An End to the Bear Market? and why this is A Turning Point
• Insiders, at Least, See Reason to Smile
• Just about anything at Forbes.
The closest thing to an admonition of caution was Barron's Technical columnist, Michael Kahn, who called this The Market Bottom That Wasn't.
That doesn't mean we can't see a decent bounce here -- there's lots of liquidity, and as we saw last week, the market stopped going down on bad news. That's usually good for a 5-10-15% counter trend rally. We saw that begin last week.
But Dow 20,000 this year? I highly doubt it . . .
>
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Monday, March 24, 2008 | 11:45 AM | Permalink
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this is a nice bear rally, bear markets are prone to sharp clearing rallies. i don't think the world is ending or dow goes to 10,000. but,...given the current macro-econ conditions in the US and how long the latest bubble lasted, i highly doubt we are done unwinding the bubble's effects and that these are sustainable gains from which we move materially higher over the next 12-18 months. nice little rally tho. muddle through economy, sideways markets with a lot of ups and downs next 3-12 months seem likely.
Posted by: craig | Mar 24, 2008 12:02:22 PM
The Times article on insider buying raises a question that I haven't seen addressed here - what do insiders see that we don't see? Why is there strong insider buying at the same time that the CFO survey is so negative?
Posted by: Smokefoot | Mar 24, 2008 12:16:10 PM
Barry you've hit on the reason I'm so critical of most people that talk about "historical" behavior when looking at some metric. I have found that they almost never correct for the macro trend.
For instance a lot of people say this reminds them of 98, but if you look at the charts the 200 day MA never even got to the point of decline during the 98 panic.
People base their behavior as if we are always in a bull market (or bear market once those are old) rather than doing proper time series analysis. And don't even get me started on the difference in analyzing a cyclical bull/bear during a secular bull vs. a secular bear. There is good (albeit anecdotal at this point) evidence that we are in the middle of a secular bear market and will see anemic returns for at least another 8-10 years.
Posted by: Mikkel | Mar 24, 2008 12:17:40 PM
The only one of these articles with any value is "Insiders, at Least, See Reason to Smile." The rest are just the usual BS technical analysis, sorta like reading (and smelling) goat entrails...especially the Cramer stuff.
Posted by: TempusFugit | Mar 24, 2008 12:27:59 PM
15% is 1460
10% 1397
5% 1335
but with a few dips and bumps could/should end next Monday.
What I'm confused about.... is that they are trying to trade it like a "Crisis" Trade... where we end a... 9/11 or Gulf war, and we rally 1500 pts
The Crisis trade was in August... and we had the "Denial rally" in October.
We should be trading a Recession... Which tends to end when there are some signs of recovery... Not sure what those signs are.. but...
Posted by: Eric Davis | Mar 24, 2008 12:27:59 PM
DOW 20,000. Right. From some guy in Indiana I never heard of.
Posted by: Max | Mar 24, 2008 12:28:49 PM
Carter Worth (Oppenheimer)...for what it's worth, has been consistently saying this was no bottom also. I don't know what he would say today, but...
Posted by: Crim Jamer | Mar 24, 2008 12:35:21 PM
what can ANYONE say when the market is totally devoid of ANY reality.
This is just so fucked it defies description...
It just gives those hopelessly optimistic perma bulls fodder for another week/month.
THE whole BSC thing is/was telegraphed from the get go. No wonder it's SP NEVER touched the actual offer price...Fucking fix was in before it was even announced.
Ciao
SMS
Posted by: michael schumacher | Mar 24, 2008 12:41:44 PM
Well, there are dead cat bounces and then dead fat cat bounces. Does a dead fat cat bounce more? I doubt it, but I will enjoy it while it lasts...
-- r
Posted by: DesiPanchi | Mar 24, 2008 12:43:50 PM
Whenever MS starts dropping F bombs, you know the shorts are hurting.
Posted by: ciaociao | Mar 24, 2008 12:52:04 PM
Insiders: "Herrrre sucker, sucker, sucker...herrrrre sucker, sucker...."
Gotta have someone to sell to. It could be you!
Don't be a deleveraging enabler.
Posted by: Mr. Market | Mar 24, 2008 12:52:30 PM
BR,
I have called the bottom (have been doing it for 25 years) ten days ago when S&P 500 was trading at 1285 and the bears like you were celebrating victory and talking about “going crazy short”.
http://bigpicture.typepad.com/comments/2008/03/what-are-broker.html
Posted by: Bearish Blind Squirrels | Mar 24, 2008 12:53:37 PM
Insiders helped cause this whole credit mess...insiders have no clue what the average American is like...insiders are the last group I would follow now. I know a former Bear alum who paid 50 for Bear 2 weeks ago.
Posted by: Dee Leverage | Mar 24, 2008 12:55:15 PM
Was this bullish?
"Insider Buying Set Records in August"
"NEW YORK (AP) — Insiders purchased shares of their companies’ stock at a record pace in August, analysts said, as credit market deterioration threw stocks into a tailspin during the month.
The trend of buying among insiders, who are typically long-term investors, was one of the few bullish signals last month, said InsiderScore.com, a Web site that tracks insider transactions.
According to Thomson Financial, insiders drove buying volumes to their highest monthly levels since 1990, with $465.5 million in purchases."
http://www.straightstocks.com/investing-lessons/record-insider-buying-what-does-it-mean/
Posted by: Jay | Mar 24, 2008 12:55:19 PM
No post on the two money honies on Meet the Press yesterday?
I actually gained some respect for Maria, but Erin the Pinhead just made herself look ridiculous. Can someone please tell her that they didn't invite her on the show to read her notes to everyone?
Posted by: Big E | Mar 24, 2008 12:55:29 PM
this move should be good for your inventory,but dont fall in love and forget to sell.
Posted by: cathompson | Mar 24, 2008 12:58:16 PM
nope not hurting at all.....just re-arranging deck chairs on the titanic is all.
We ALL will be hurting because of the failed policies to inflate this all away while the top %1 doesn't have to so much as bat an eye.
That you can't see that is what is wrong with all of this. But please go ahead and make it about the latest pump and dump scheme since we now have the Fed as an LLC to back stop every failed strategy.
i am merely commenting on the state of what passes for financial "news". Too bad you want to make it more than that.
Ciao
MS
Posted by: michael schumacher | Mar 24, 2008 12:58:41 PM
It is also easy to see that this rally, like all others recently, is on pathetic volume...QQQQ not even at half 100 day MA volume.
Posted by: Dee Leverage | Mar 24, 2008 12:59:01 PM
Take billions from the Fed window, create the illusion of panic in the bill market, squeeze the shorts, lather, rinse, repeat.
Posted by: Crim Jamer | Mar 24, 2008 1:06:34 PM
Insiders are buying, in an effort to show support for their stocks, because they realize if the truth gets out too quickly, this market plummits! Besides if your an insider and know that your going to be at the company for the next 10, 15, or 25 years, then buying now shouldn't hurt you too bad, and help you a whole lot if things turn up intermediate, and you sell again. These jokers are kings of minipulation!
Posted by: JustinTheSkeptic | Mar 24, 2008 1:09:52 PM
http://contraryinvestor.com/mo.htm
Sorry do not think that the Pandora box is closed on the financial system as it is just sitting on dynamite, the last flux was a regurgitation, the CD’s markets and the associated derivatives just need a small tailspin to finish the whole sector.
See how much derivatives JP Morgan add throughout its acquisition of Bear and Stern (One may understand why none of the interested party should let the staff go right now) in its already loaded contra accounts it will add 14 Trillions USD of Bear Stern derivatives, and may be this study will complete the ambiguity of CD’s versus derivatives.
May be someone from CB’s or BIS is on the top of the events, may be Bank’s CEO’s have a full understanding of their books in derivatives, may be they all offset each other through reliable counter parties or may be this time again the proverbial musical chairs are getting scarcer?
In any case whoever will tell that he has confidence in the fiancial sector must be listened to on theses topics.
Posted by: Philippe | Mar 24, 2008 1:10:04 PM
It's not surprising that all the money that came out of commodities early last week went somewhere, and it look's like it went into stocks.
But what I don't see anybody talking about is... who the hell were the sellers of all those commodities? GLD UNG OIL DBA DBC etc??
Posted by: Bob A | Mar 24, 2008 1:11:07 PM
Add in End Of Qtr. for those tough to get out stains...
Posted by: MarkTX | Mar 24, 2008 1:11:34 PM
well....."shitty group" did tell a group of analysts (non-public information delivered to a group of people is just a bit illegal but I digress) that they were to have "a few hundred billion in asset sales in the coming weeks".
And as previously stated......why sell when you can go get free money from the FED (with a non-recourse backstop NO LESS) and toss it at that "dip"....
Ciao
MS
Posted by: michael schumacher | Mar 24, 2008 1:21:01 PM
Look, I really don't see any buying today, people must be very happy they can have a very decent lunch and forgot to show us some volume on today's trading, I think we need more good news to stimulus more short-covering rally! Dennis, tell us what to buy, show us the list!
Posted by: Ben | Mar 24, 2008 1:22:01 PM
