I believe you to be wrong for a couple of reasons.

First off value investors have ben slowly moving into the market picking off those solid stocks with low valuations relative to what they should be at. As an example Citi was trading at around 1 on its p/b ratio. Ya there are corrections still but we have tested the 1370 low on numerous occasions and still haven't busted throught that.

You also forget the retailers who for some reason are showing signs of strength coming off the first quarter but that means nothing if you are always eamining backwards looking data that you consitantly point out. The markets are a forward looking indicator not a backwards one. Recession no recession doesn't make a difference most bad news is priced and anything outside of catastrophic wil have little effect on the markets. SO there is still plenty to push up

Very insightful quote jackg.  I am going to have to file that one away.  Its got style.  Oddly enough, I feel a couple of my positions might actually be grooving along with Livermore's ideas.  A couple of my other ones, well...I'll just say that I hope the market doesn't fall into the abyss in the next two weeks so I can collect my mid-May dividends and move along.

Admittedly, I am new at this, but I just don't see how we could possibly be in a bear market still.  The charts look pretty obvious.

I'll be happy to buy your shorts!  (I mean the stocks your selling, not your clothing).

The economic data isn't that bad (it's just a recession...  or not-even a recession...  it happens, it's part of the business cycle).  Stock market recovery precedes economic recovery.  The earnings aren't that bad (aside from financial services).  The financial system is obviously not collapsing, in the same way that it hasn't collapsed in the past every time everyone thought it would (like 1987, for example).

Call me exuberant.

hoop2010:

I believe you to be wrong for a couple of reasons.

First off value investors have ben slowly moving into the market picking off those solid stocks with low valuations relative to what they should be at. As an example Citi was trading at around 1 on its p/b ratio. Ya there are corrections still but we have tested the 1370 low on numerous occasions and still haven't busted throught that.

You also forget the retailers who for some reason are showing signs of strength coming off the first quarter but that means nothing if you are always eamining backwards looking data that you consitantly point out. The markets are a forward looking indicator not a backwards one. Recession no recession doesn't make a difference most bad news is priced and anything outside of catastrophic wil have little effect on the markets. SO there is still plenty to push up

 

Lots of people want to believe employment numbers a backwards looking but they really are both backwards and forwards.   They have a future economic impact.  Think about it.   People without jobs tend to spend less money.  Right now that rate is growing...not falling.  Also, mortgage default rates are still growing not falling.  This is a future indication of further write offs in the financial sector.  Home values also continue to fall.  This is a future indication of further mortgage defaults.  Today, the Fed announced they are also taking on credit card defaulted debt.  WTH!!  Defaulted credit card debt is basically worthless.  Now taxpayers are covering for somebody's credit cards???   The fact the Fed is doing this points in the direction that things aren't as rosey in the financial sector as they want you to think.  LIBR rates are still high.  These are the rates banks charge each other.  High LIBR rates means banks don't trust other banks.  Many loans base their variable interest on LIBR.  With high LIBR, it is putting a squeeze on borrowers and will produce further defaults and write offs.  Like I said earlier, the commercial real estate bubble hasn't popped yet.  When it does banks are screwed. 

 

What happenes when all those value investors who are currently buying realize they made a mistake and start selling as this market/economy continues to crumble.  How can CITI be correctly valued when they have mortgage assets on their books which are still losing value with no clear bottom in sight?

But... but... but... Bernanke and Paulson both say "subprime is contained"!

LOL

jackg1606:

hoop2010:

I believe you to be wrong for a couple of reasons.

First off value investors have ben slowly moving into the market picking off those solid stocks with low valuations relative to what they should be at. As an example Citi was trading at around 1 on its p/b ratio. Ya there are corrections still but we have tested the 1370 low on numerous occasions and still haven't busted throught that.

You also forget the retailers who for some reason are showing signs of strength coming off the first quarter but that means nothing if you are always eamining backwards looking data that you consitantly point out. The markets are a forward looking indicator not a backwards one. Recession no recession doesn't make a difference most bad news is priced and anything outside of catastrophic wil have little effect on the markets. SO there is still plenty to push up

 

Lots of people want to believe employment numbers a backwards looking but they really are both backwards and forwards.   They have a future economic impact.  Think about it.   People without jobs tend to spend less money.  Right now that rate is growing...not falling.  Also, mortgage default rates are still growing not falling.  This is a future indication of further write offs in the financial sector.  Home values also continue to fall.  This is a future indication of further mortgage defaults.  Today, the Fed announced they are also taking on credit card defaulted debt.  WTH!!  Defaulted credit card debt is basically worthless.  Now taxpayers are covering for somebody's credit cards???   The fact the Fed is doing this points in the direction that things aren't as rosey in the financial sector as they want you to think.  LIBR rates are still high.  These are the rates banks charge each other.  High LIBR rates means banks don't trust other banks.  Many loans base their variable interest on LIBR.  With high LIBR, it is putting a squeeze on borrowers and will produce further defaults and write offs.  Like I said earlier, the commercial real estate bubble hasn't popped yet.  When it does banks are screwed. 

 

What happenes when all those value investors who are currently buying realize they made a mistake and start selling as this market/economy continues to crumble.  How can CITI be correctly valued when they have mortgage assets on their books which are still losing value with no clear bottom in sight?

From a technical standpoint, we aren't yet in a bear market. But that's exactly where this is going. The key markets haven't yet hit the roughly -20% mark. I guess it's not so much technical as relatively straightforward to assess.

But, the bigger issue, the one that actually matters is that there are still a majority of investors out there that don't see the cockroaches and dry rot in many parts of the economy, until they realize that it's there and the prices reflect that fact, we aren't going to see the real bear market.

The Fed right now, is just absolutely incompetent, the right thing to do here would be to ratchet up the interest rates and squash inflation. At this point the storms been brewing long enough that the recession will be here whether or not it's convenient for the politicians. It's just not possible to pop this bubble without people freaking out and crashing things.

The expectations just don't allow for that. If the investment world were heavily composed of folks that understand corrections to be necessary. But really there just aren't enough of those sorts around and as such people are going to be panicing.

I guess Fannie and Freddie are backing up my viewpoint.  I'm not completely nuts after all.

Unbuhleevabble!!!  CNBC is still trying to spin bullishness.  LOL  

My bullish ass got smoked today, 05-07-2008.  ouch.

Not to worry.  I have your perma-bull back.  This was nothing more than the 20-day scheduled pullback, just like the end of March, and mid-April.  All the indicators I could get my hands on show me today that the same story is true as with the previous two:  namely, that profit-takers are driving down the indexes, and that action is exacerbated by the short-selling bears eager to jump on the trend before it develops.  Look for the short squeeze to jerk us right back over 13k.  The short-interest cover time is creeping steadily higher.  Shorters are going to get burned by low volume very soon.

I figured this thing was about to turn.  Yesterday morning I added to my short positions before the rally.  I ended up averaging my positions up and then ended the day in negative territory.   Now I'm pissed at myself for not shorting at the better price but ended the day with a $700 gain in my positions.  This swing down may have some nice legs to it.  I'm aiming for a 30% gain. 

 

I plan to continue to add to my positions as the trade continues to develop.

Ron,

 

Several important lines of support on the SP500 were broken today.  I am ready and willing to sell short shares to your bullish butt.   LOL

If the SP500 drops below 1380, bulls will be the ones getting slaughtered.

Lets see how well the market holds up tomorrow after AIG reported.  Remember, the problem behind the financials is foreclosurers.  CNBC will tell you the market is forward looking and you need to buy in order to profit when the market rebounds later this year.  Let me tell you a little secret....it ain't happening.  Foreclosure rates are still accelerating without a bottom in sight.  Expect the financial sector to get worse not better.  The rest of the economy depends on the financial sector to finance it's capital items.  Financing is locked up folks.  Is that priced into this market?  How about high inflation and high unemployment rates......are these priced in?  Give me a break!!! 

 

Don't worry, the market will evenually rebound but in another 2-4 years....maybe longer if Obama wins the White House.