# Equities On Verge Of Very Violent Rally



## sam76 (9 March 2009)

DJ MARKET TALK: Equities On Verge Of Very Violent Rally -Broker 


0453 GMT [Dow Jones] World equity markets are "on the verge of a very violent and savage short-term bear market rally," according to Goldman Sachs JBWere. Says with DJIA down 20% in 17 days, it's one of the most extreme short-term oversold positions in 20-50 years. Cites American Association of Individual Investors data showing 70.27% of investors were bearish as of Thursday, highest reading since index creation in 1987. S&P/ASX 200 up 0.8% at 3169.7. (DWR) 


20% in 17 days does seem a bit over done.


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## prana (9 March 2009)

I think so too, a bear market rally.


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## Beenjammin (9 March 2009)

Excellent! Anyone want to hypothesize on which sectors are likely to be the big movers?


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## Stormin_Norman (9 March 2009)

ill believe it when i see it.


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## prana (9 March 2009)

XEJ & XMJ


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## IFocus (9 March 2009)

Yes buy now I love this shredding of CNBC advice



http://leavittbrothers.com/stocks-o...g-videos/2009/03/the-daily-show-rips-cnbc.cfm


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## GumbyLearner (9 March 2009)

IFocus said:


> Yes buy now I love this shredding of CNBC advice
> 
> 
> 
> http://leavittbrothers.com/stocks-o...g-videos/2009/03/the-daily-show-rips-cnbc.cfm




Fantastic link IFocus. 

ROFLMAOAPM! :blaah:

The most hilarious link provided to date.

Cheers again mate.


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## Gundini (9 March 2009)

Good!

I'm gunna dust off those credit cards to the max, and gear up on CFD's! 

PS: Don't you kiddies try this at home.... It's only for professional idiots


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## Stormin_Norman (9 March 2009)

IFocus said:


> Yes buy now I love this shredding of CNBC advice
> 
> 
> 
> http://leavittbrothers.com/stocks-o...g-videos/2009/03/the-daily-show-rips-cnbc.cfm






i love stewart and colbert.


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## M34N (9 March 2009)

IFocus said:


> Yes buy now I love this shredding of CNBC advice
> 
> 
> 
> http://leavittbrothers.com/stocks-o...g-videos/2009/03/the-daily-show-rips-cnbc.cfm




This is so very true, just take one look at the front page of CNBC right now and you will see conflicting news headlines everywhere. It happens daily. If it wasn't for their free live quotes I would hardly ever have a use for them.

Look at this snapshot I took just now and circled all the conflicting headlines... I mean come on! "No incentives to buy stocks" and then the headline CLEARLY below that saying to "put 80% cash in stocks!" And just to confuse everyone more, "Picking a market bottom: why the pros are all wrong". :kiffer: :bong:


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## prana (9 March 2009)

A violent 50% rally (of the residual) after a 70% fall is still a bad investment - bear market rally. Definitely for crazies...

... or idiots


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## sinner (9 March 2009)

Several analysts agree

http://www.safehaven.com/article-12782.htm - Maund
http://www.gold-eagle.com/gold_digest_08/hamilton030609.html - Hamilton
http://www.safehaven.com/article-12783.htm - Lerner

Also, the only two times the DJIA has ever hit 12 year low before was in April 8, 1932, and December 6, 1974.

From http://www.safehaven.com/article-12779.htm
By Prieur du Plessis


> According to Thomas Lee, US Equity Strategist at JPMorgan, retracing 12-year lows for the Dow is an incredibly rare event (see chart below). "Besides the retest of 1997 lows seen on Monday, this has only happened two other times, on April 8, 1932, and December 6, 1974," said Lee (via The Big Picture). It is noteworthy that the 12-year low in 1932 was three months before the end of the bear market and the one in 1974 was exactly the low for that bear market.
> 
> Barry Ritholtz added: "Hitting a 12-year low is by no means proof the bear market is over. And, two prior examples do not make a sufficient sample. [But] the oversold nature of the market, as well as the virtual straight down drop that brought us here, does present a real possibility of a strong market rally."
> 
> The precipitous stock market declines are reflected in the results of this week's survey of investor sentiment by the American Association of Individual Investors (AAII), courtesy of Bespoke. Investors are now at their most bearish levels since the start of the survey in 1987 with 70.27% of respondents currently in the bearish camp - a necessary prerequisite for a major market low














From the Lerner article


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## prana (10 March 2009)

well my reasoning is a lot simpler - selling climax.

1. People are coming to me and saying, dude did you see the market collapse yesterday.
2. OMG the Dow tanked again
3. You're crazy to consider buying equities

Together with the crazy amounts of liquidity injection, and the develeraging, and the contango, I'm positioned for oil and nickel. XAO also hitting 92 projected line. Of course, all it takes is another bank Chapter 11 to break it all. GM, AIG? Like was said, crazy punters only.

Next in my view, food and grains! But I see it being 2-5 years for me.


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## sinner (10 March 2009)

prana said:


> Next in my view, food and grains! But I see it being 2-5 years for me.




I also like food and grains (and a few other soft commods) for the long term. Good luck!


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## nomore4s (10 March 2009)

If we do finally break to the upside it will be pretty violent imo, alot of people will jump on thinking we have hit the bottom.

Picking when we will see this rally will be the trick.


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## gfresh (10 March 2009)

I would have thought before we can have a large multi-week rally, some sort of 'solution' has to be presented for the large US financials, or US employment figures would have to say they had only laid off "only 300k", rather than their "600k" recently - showing a possible slowing of the recession.. At the moment, doesn't seem to be much of that going on. 

Pull up JPM for example.. something is going on there. 

But if we do have a rally, I can't wait for the media headlines to explain all problems have gone away


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## sinner (10 March 2009)

PS I should mention I am not long any indices right now, but almost my entire long portfolio has just moved onto the ASX200 or 300 in the recent rebalancing. A couple of them were big surprises! 

Bring on the survivorship bias.


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## prana (10 March 2009)

well all this dilution and record liquidity injection has one absolutely sure end point of dislocation - primary industry ! It's even more compelling than ever. More printing, more bank failures, more zombie -ve asset banks, more it looks right for me. Disclaimer - these are my thoughts only, no advice given here. I am personally LONG commodities/energy.


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## sam76 (11 March 2009)

lol

good timing on this thread, hey?

question is , is it sustainable?


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## prana (11 March 2009)

heheh but it was financials that bounced - financials 1 prana 0    :


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## sinner (11 March 2009)

prana,

Check this please, I add another analyst to the pile above ^^

http://globaleconomicanalysis.blogspot.com/2009/03/another-bear-market-rally-or-something.html

*Another Bear Market Rally or Something More?*

Worth checking out. Mish sometimes sprinkles a bit of EW in with his usual commentary and his call (or wherever he is getting it from) is broad (I'm sure you get better as a client : ) but good enough for those watching at home.


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## Aussiejeff (11 March 2009)

sam76 said:


> lol
> 
> good timing on this thread, hey?
> 
> *question is , is it sustainable?*




For as long as uber-bullish "leaked internal memos" are made by bailed-out US bwankers.... 

It's the New Strategy. 

A good leak and a willing media. 

Powerful stuff.


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## Bushman (11 March 2009)

Aussiejeff said:


> For as long as uber-bullish "leaked internal memos" are made by bailed-out US bwankers....
> 
> It's the New Strategy.
> 
> ...




As some dude on the internet said about Citi:
'If someone paid all my bills and debts, even I would be profitable'.


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## nizar (11 March 2009)

Bushman said:


> As some dude on the internet said about Citi:
> 'If someone paid all my bills and debts, even I would be profitable'.




Classic


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## prana (11 March 2009)

It might well be (prana 0 financials 2) but my hopethesis is that this is a bear rally and a covering of shorts.


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## M34N (11 March 2009)

Bushman said:


> As some dude on the internet said about Citi:
> 'If someone paid all my bills and debts, even I would be profitable'.




Legendary 

Our market doesn't even look that good today, up less than 2% at the moment even after a rebound of 5.8% on the Dow? A lot of the miners off their day highs, the banks doing a good job holding up the bourse. Wonder how long this enthusiasm will last before everyone realises that none of the problems have disappeared and things have only gotten worse.

As nun says, bless'em.


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## Pythagerous (11 March 2009)

Wall Street and other markets up overnight. Australia Market up sharply at open. Although it may just be a rally after a heavy down period, it does offer some hope, and if the market can string a couple of positive days together, it may go a fair way to restoring some confidence back in the economy, which is what the economy needs.

Although the data at the moment is gloomy, the sharemarket generally looks ahead 3 months in advance, and with markets always recovering before the majority of people expect it, this could be the crank that we need to get the engine going. Alternatively, it could well possibly be the last grasp for air, before it sinks to the bottom of the old Blue Haven.

With interest rates dropping, consumers becoming concious of their spending and saving more and companies cutting down costs in order to make profit, there will become a time, where consumers are confident with their financial position and companies start to look like good investments, as they have scaled back costs and put themselves in a better position to make profit.

In a falling market, guaranteed bank interest of about 4% is attractive to investors, and why wouldnt it be. However there will come a point in time where the stock market will start to look more attractive then the interest the banks are offering.


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## michael_selway (11 March 2009)

sinner said:


> prana,
> 
> Check this please, I add another analyst to the pile above ^^
> 
> ...




Hey nice, how true



thx

MS


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## Glen48 (11 March 2009)

Appears Helicopter Ben said this should be over by Xmas, and Citi bank who were with in days of folding made a profit had to use some doggy figures so the DOW shot up.

In terms of the main drivers of the bullish overnight action, an *"accidently"* leaked internal memo indicating Citi has actually been profitable for the first two months of the year was a prime catalyst. It is of course early days and we would caution against attaching too much weight to this one event, but it does at least serve to remind the market that we are not in a terminal tailspin and profitability will eventually recover. This is crucial for wider market confidence.

On the negative side of the ledger, it is concerning to see the TED spread ticking up, suggesting that banks confidence in each other is not improving. This has the potential to cause a serious impediment to economic recovery and we will need to see lending conditions improve if a wider market rally is to prove sustainable.


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## Pairs Trader (11 March 2009)

We may have made a short term tradeable bottom, however not a bear market bottom in my opinion. We have only come back to the long term regression trend line, I predict we will go lower and sometime over the next 18months we will mark the bear market low.


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## nikemi (11 March 2009)

Pythagerous said:


> Wall Street and other markets up overnight. Australia Market up sharply at open. Although it may just be a rally after a heavy down period, it does offer some hope, and if the market can string a couple of positive days together, it may go a fair way to restoring some confidence back in the economy, which is what the economy needs.
> 
> Although the data at the moment is gloomy, the sharemarket generally looks ahead 3 months in advance, and with markets always recovering before the majority of people expect it, this could be the crank that we need to get the engine going. Alternatively, it could well possibly be the last grasp for air, before it sinks to the bottom of the old Blue Haven.
> 
> ...




Well many bottoms have been called before and all of them have been false, so maybe now that finally everyone is so sceptic to this rally things will be different at least in the short to medium term. Many 'pros' have said that for a true bottom to come to play everyone should be saying that we are no where close to the bottom.


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## Prospector (11 March 2009)

I think it is KRudd's stimulus package at work; all those Family A and B people got their money today!


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## prana (11 March 2009)

glad to know my M1 is being diluted by SIR KRUDD so the dole bludgers can spend on my wage !


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## Struzball (11 March 2009)

5% short covering rally in the US. No shorts on fincancials to cover here so no rally.


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## psychic (11 March 2009)

prana said:


> glad to know my M1 is being diluted by SIR KRUDD so the dole bludgers can spend on my wage !





Interesting quote when you consider that dole bludgers were excluded from any hand-outs thus far. Check your facts please.

www.centrelink.gov.au

where does it state that a dole bludger on newstart payments gets a cash bonus?


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## prana (11 March 2009)

tongue in cheek .... Sorry I cracked a nerve...


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## Aussiejeff (11 March 2009)

Oh dear!

Pass the Bex please!

Looks like somebody forgot to tell the Chinese about the bwanker party ..... 



> March 11 (Bloomberg) -- *[size=+1]China’s trade surplus plunged in February[/size] as exports fell by a record*, adding pressure on the government to spur domestic consumption to prop up the world’s third-biggest economy.
> 
> The trade gap narrowed to $4.8 billion, about an eighth of the amount in the previous month, the customs bureau said in a statement. Exports tumbled 25.7 percent from a year earlier. Imports fell 24.1 percent.
> 
> ...




http://www.bloomberg.com/apps/news?pid=20601087&sid=a9Ih4pDxaIK4&refer=home

Perhaps this not-so-bullish news has popped the ASX party-goer's bubbles?


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## Julia (11 March 2009)

psychic said:


> Interesting quote when you consider that dole bludgers were excluded from any hand-outs thus far. Check your facts please.
> 
> www.centrelink.gov.au
> 
> where does it state that a dole bludger on newstart payments gets a cash bonus?



In the current environment of rising unemployment, it might be good not to use the term 'dole bludger', Prana.
Plenty of conscientious, hard working people are losing their jobs through no fault of their own.


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## prana (11 March 2009)

true true. 

I'll be reminded.


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## Prospector (11 March 2009)

I read the other day that Rudd was planning on helping disadvantaged people into Uni.  I wonder if he is doing that automatically with the number of people now being unemployed.  If an unemployed person has school aged children I presume they are on Family A and Family B benefits which means at least $950 per child.


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## skc (11 March 2009)

prana said:


> true true.
> 
> I'll be reminded.




Is this the "Let's pick on Prana thread"?

Prana, can you please make sure you use proper capital letters? Also, you missed a full stop between the first and second "true".


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## sinner (11 March 2009)

Well, I was trying to make him feel better but I don't think he read the article like michael_selway did :

Just wanted to point out not sure I agree with any of the analysts I've posted or the thread topic. In October Bob Hoye claimed we would be a tradeable rally till March based on his historical analysis (which is generally bang on). 
I was thinking how this had turned out badly during the recent slump into the 600s on the SP500 but now thinking he was spot on again.


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## Aussiejeff (11 March 2009)

There may well be very violent rallies if some other skeletons spook the market off the cliff again. Not sure they would involve equities as such, though! 

Hark! Do I see a UBS corpse flailing?


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## sam76 (13 March 2009)

well, that particulat analyst must be pretty chuffed with himself this morning.

it would be nice if the rally extended to us though....


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## sam76 (14 March 2009)

and again.

not bad.


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## Family_Guy (19 March 2009)

This was one of the funnier threads i've read in a long long time. The bloke in the first link (the story) was right all along. The rest of you laughed while the others who once saw this link below .......knew it was coming. Since i saw that chart below, i've sworn by it and it's worked a treat. 

http://api.ning.com/files/AwcqrPivB...Z82l176idQKOnW-nGw5xwaw9BwYT/1937DowJones.jpg


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## sam76 (19 March 2009)

yeah, it's not too often those guys get it right.

but credit where credit is due imo.


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## Timmy (19 March 2009)

sam76 said:


> yeah, it's not too often those guys get it right.
> 
> but credit where credit is due imo.




I agree Sam.  Especially where the call was made in the face of overwhelming bearishness and doom-and-gloom.  Easy to succumb to peer pressure, much harder to think and assess independently, even harder to publicly announce the view so counter to the crowd.  Kudos to the guy.


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## gfresh (19 March 2009)

The only problem is for every correct prediction you read, you can find 10 that weren't correct at all. But they kind of disappear out the back door don't they. 


p.s. the first leg of this rally may already be over with the DJI hitting resistance, and our market also hitting resistance, and buying getting thinner.


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## sinner (19 March 2009)

Family_Guy said:


> This was one of the funnier threads i've read in a long long time. The bloke in the first link (the story) was right all along. The rest of you laughed while the others who once saw this link below .......knew it was coming. Since i saw that chart below, i've sworn by it and it's worked a treat.
> 
> http://api.ning.com/files/AwcqrPivB...Z82l176idQKOnW-nGw5xwaw9BwYT/1937DowJones.jpg




That is a **** scary chart.


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## gfresh (19 March 2009)

Initially I thought that.. but I question the relevance of a NASDAQ 100 ETF compared to the DOW ? especially considering the NASDAQ didn't exist in 1937. Not even comparing apples and apples.

Also it seems to have fallen apart right about now - On the chart the dow fell from an equiv ~8750 to ~7300 (hard to tell, chopped off), which is a large 16.5% fall. So in the next week, or give it two, the qqqq has to plunge from ~2970 to ~2479. According to the chart has to be a much lower low/crash - ~16.5% from here wouldn't be that at all.


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## Family_Guy (19 March 2009)

gfresh said:


> Initially I thought that.. but I question the relevance of a NASDAQ 100 ETF compared to the DOW ? especially considering the NASDAQ didn't exist in 1937. Not even comparing apples and apples.
> 
> Also it seems to have fallen apart right about now - On the chart the dow fell from an equiv ~8750 to ~7300 (hard to tell, chopped off), which is a large 16.5% fall. So in the next week, or give it two, the qqqq has to plunge from ~2970 to ~2479. According to the chart has to be a much lower low/crash - ~16.5% from here wouldn't be that at all.



Agreed with the apples thing. My feeling is we are a week ahead of the 37/38 line and the bounce has started already.

That chart was posted by someone a month ago.....when the QQQQ line stops. And what has happened is what i think may be happening......i may be wrong in my assessment of whats going on but i'll tell it anyway and any thoughts would be welcome into my thinking.

The reporting season is basically over for now. So we aren't hearing so much bad news, one or 2 of the US banks recently reported a profit for one of the months and that combined with general other decent news (not that there is much, but there ain't much bad news either) has given a few cashed up peeps to come in and test the water, pushing some SP's up. What that chart does not show is the crash that happened after the mid year reporting season started.

In anycase, i'll enjoy what eva ride gets handed to me and follow this chart as much as i can.......seems to be the only chart that has been right so far.


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## Aussiejeff (20 March 2009)

Family_Guy said:


> The reporting season is basically over for now. So we aren't hearing so much bad news, one or 2 of the US banks recently reported a profit for one of the months and that combined with general other decent news (not that there is much, but there ain't much bad news either) has given a few cashed up peeps to come in and test the water, pushing some SP's up. What that chart does not show is the crash that happened after the mid year reporting season started.




Yeah.

The next "reporting season" should be a real doozie. How much smoke & mirrors will be needed to cover up the appalling results?

Not to worry. As the bad performers with plummeting capital are continuously dumped from the DOW & ASX indexes, outperformers will take their places and help to inflate the indexes to new "highs" 

Frankly, due to that very policy of replacing tanking companies with growing ones, I think the indexes are rapidly losing any touch with reality....

All *Ordinaries* Index? That's mis-leading. Companies making it into that elite index are hardly "ordinary" by any standard.

Maybe it should be re-named the "All _*Outperformers*_" Index.


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## Nyden (20 March 2009)

Aussiejeff said:


> Yeah.
> 
> The next "reporting season" should be a real doozie. How much smoke & mirrors will be needed to cover up the appalling results?
> 
> ...





AJ, may I ask as to what your market intentions are? You're always so pessimistic, and I'm just wondering if you ever see opportunity? Are you just waiting for something of a perfect entry point, or are you in the 'off the market forever' crowd?

 ... as they say, trade the market - not the economy 

Oh, and how is replacing companies in the index a bad thing? I was under the impression that this had always happened. Yeah, probably much better to keep the losing / bankrupt stocks in the index, maybe send out announcements suggesting for everyone to sell, as well.


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