US jobs data last gasp of this bear market rally
Posted on 08 August 2009 with no comments from readers
Will Friday’s close prove to be the top for stock markets? It could be that a few brave souls choose to chase the market a little higher on Monday and Tuesday on the back of the ‘unexpectedly good news’ that ‘only’ a quarter of a million lost their jobs in America last month.
Lest we forget the cause: this is the worst recession since the 1930s. More than one thousand merchant ships are lying idle because global trade has collapsed faster and more deeply than in the Great Depression. Industrial output has crashed around the world. These are hard facts, not economic fantasy.
Rally almost up
So the assertion that the stock market rally has gotten ahead of reality is so blindingly obvious that few would actually dispute it. If you push people further they will also concede that the notion of a quick global economic recovery is also equally absurd.
Why then hold stocks after a rally of historic length and strength? We even have the historic precedent of a similar rally in the 30s of almost the exact same strength and just a few days longer than the current rally.
Markets rise until all the people who are going to buy have bought, and how far can we be away from that point? Less than a week, a few days? Besides where would you expect new buyers to suddenly come from in the middle of August?
Downside risk
The downside risk at this point is enormous. Was it not in the middle of August that the first serious subprime problems emerged two years ago? Are memories so short?
A true market bottom can only be called when investors give up on markets and capitulate – that is not the sense I get from markets now, or some of the comments I get back on this website.
The most laughable idea is that this is the start of a new bull market. The stock market in a secular bear phase is a mincing machine to grind down wealth, and only the sharpest short operator makes money. Get out and stay out!
no Comments posted by readers:
I don’t think it’s investors or your average Joe that has been buying up all these shares in the US. Most of this money has been government money and tarp money as well from the last stimulus package and until money from that last stimulus package runs out we won’t see the market running out of steam just yet. I just don’t see the average investor in the US flocking to buy stocks these days and when they dump they usually plan to dump when everyone is buying as we have seen happen in the UAE in the past.
I reckon we may see more of these crazy gains over better than expected losses, in expectations with expected losses or some other BS. Oil usually falls before stocks fall or crash and gold usually rises and as of now none of this has happened so more of this BS rally this week. With all the bad news out what would bring the market down now other then the government selling everything they bought in the past??
When the market comes crashing down it will come down like Emaar did in the past and will leave all investors wondering who could have sold so much and still be selling?? lol..
Ed Note: well we did have oil pull back and gold rise, and the dollar is weakening – all indeed usually pointers to trouble in the markets. Also if you are right about the money in the market being professional and not retail it will exit fast…