Last bear throws in the towel?
Posted on 20 March 2010 with no comments from readers
A bear market rally is not usually over until the last bear throws in the towel. Our friends at bearmarketcomparison.com seem about to cross that line. Have a look at this graph:
And yet if the biggest bear is coming out of the market this usually marks a turning point. Is it really different this time? ArabianMoney does not think so.
What you normally see after a big crash is a big rally and then a big correction. Consider these three charts from MoneyWeek that show three very recent examples superimposed on the 1929 Great Crash:
The last graph is a reminder that the Chinese economic miracle may not be quite all that it is stacked up to be. Does not that market rally look eerily like 1929?
Surely the human psychology of this is only too simple. There is a manic enthusiasm for an investment class. It goes wrong. Investors panic and all sell. Then a few decide to buy back thinking the panic is overdone. Then something happens to remind them why the asset class was sold – or they simply overdo it again – and the market comes down to near, or falls below, its recent low.
Last week many commentators jumped on the Dow passing a key chart point as a bullish indicator. Rather fewer bears highlighted the equally prescient point that the rally now almost exactly matches the rally of 1929 in percentage gain.
Unless ArabianMoney has been living on another planet we fail to see the factors required to take a bull market higher. Sure the Fed has been fixing the final stages of this rally but we all knows what happens next when the Fed inflates a bubble.
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I remember the good old days os the stock market rally in Dubai when Emaar was trading at 20+ and then during the boom days Emaar kept tanking all the way down to around 2 Dhms. Many stocks got nailed badly when the stock market in the UAE crashed and I did not see a reversal of this kind in Dubai.
In the beginning I was not convinced that the market in the US was rigged but after the announcement of the $780 billion USD stimulus package was announced and how everything was bought up in the financial sectors I am 100% convinced that this market is rigged by through the hands of FED,GS and MS (JPM as well). These days the market struggles to decline and gains like a bird gliding in the air.
With such overwhelming and irrefutable evidence, it shocks me that “inquiring investors” don’t realize that the US government (aka: the FED and their agents GS and JPM) are rigging ALL MARKETS, EVERY trading day, and especially in “after-hours” trading.
Another Big Shock:
… it also shocks me that the American people do not realize the depth of fraud, corruption, and collusion between the US government and Wall St. “investment” banks.
Third Big Shock:
… most American people don’t realize that gold and silver bullion constitute “real money”, and that its ownership doesn’t require any “counter-party” to verify its intrinsic worth.
Fourth Big Shock:
… it’s also shocking to me that there is no significant outrage among the American people amidst all of this… but maybe, just maybe in November, 2010?
Footnote: If all incumbent politicians are ousted, it will send a powerful message. Sadly, however, the massive problems will still not be addressed, until there is a near-total collapse.
The Dow is composed of only 30 stocks. The S&P 500, a whole lot more. One would think that during the trading day, that they would generally track each other. Yet, if you go to the MarketWatch web site, you can instantly move between the graphs which show the two averages. If you do this, you will notice that the reversal points nearly always occur at exactly the same time. Only one graph is on the screen at once, but you can zip between them in a fraction of a second with your mouse. Does everyone decide to start buying or selling at the same time every day? With 500 stocks in the S&P, that seems strange to me. But I’m certainly no market expert. I can see it happening most of the time, sure, but nearly every time? I don’t know, but it seems fishy to me.
I’m probably missing something very obvious. Or is the market being manipulated by someone with very deep pockets? Are some of the Feds’ primary dealers buying stocks? With what money? Is that why they won’t allow a Government audit of the ‘Federal’ Reserve Bank?
And do you ever notice how many times the market suddenly spikes up in the last hour of trading lately? The day traders have. And if Paul B. Farrell is right, get some animal traps.
Just imagine the demand for steel in China. Only for the Shanghai-Beijing bullet train project they will need an enormous supply of steel. China for one thing is not turning around any time soon.
http://www.youtube.com/watch?v=Kmr8FOaCwwU
Ed Note: Seem to remember the same being said of Dubai 18 months ago! Emerging market business cycles are dramatic and devastating. It will be no different in China.
This is a bit different than what took place in Dubai. The growth that is taking place in China is do to local demand where the growth that took place in Dubai was based on anticipitation from expatriate demand. Local demand is what is important. Real growth and demand are based off of local demand unless the expatriate has equal residency and ownership rights.
A day or so after I posted this I saw this..
http://www.bloomberg.com/apps/news?pid=20601110&sid=aNPhwwR0Smyg
With 1.4 Billion people chances are pretty good that people will use the new trains to get around in China. Everyone knew that the locals in Dubai would not be able to consume all those new units that popped up in Dubai but had the local population in Dubai been around 8 million or so like it is in Hong-Kong then we would not have seen the market tank so badly.
Locals in China have no where to go but expats in Dubai can pack up and leave at any time were costs of living and income to change as we saw last time in Dubai.
Ed Note: Note the 70% crash in Hong Kong prices post-1997, you are wrong it is all exactly the same. It is not different this time. It never, ever is!