Imminent and severe market correction

[Buffettology]

Could be a compliment, all depends on your interpretation of an economist. Being one myself, I would answer, yes!

Im not so sure China has gotten to the stage you are talking about yet, I myself, have not read anything solid that would indicate so.

I dont see it for example, in a similar situation to Thailand and its bad debt crisis of which helped trigger the Asian economic crisis. Further, Im not so sure inflation is out of hand over there. It can still be reigned in through tight monetary policy IMHO. I think China will experience a slight slowing of growth in the short-term, but not a recession/depression.

I think the US figures and their housing market impacts will be the big thing to cause trouble in the short-term. But global growth appears strong enough at least in the short-term, to keep some stability in this rampant speculation 3rd stage of our bull market.

 

[bean]

People are looking at China. Look at the US. The markets over there are in the process of blowing a top. DOW 13500 by next week anyone
Whatever it reaches as its final blowoff and then retractment then a try and failure for new highs alas a 87 type crash.
DOW last 17 trading days 8 up 1 down
7 up one down
now tonight? up again.
judging by posts another good indication (everyone aboard)

 

[Uncle Festivus]

Data just out -

MARCH SALES OF EXISTING HOMES DOWN 8.4%, BIGGEST DROP IN 18 YEARS

U.S. April consumer confidence at lowest level since Aug.

Mmmmm..... biggest drop in 18 years......lowest levels since.......

Hard to ignore

 

[wayneL]

People are looking at China. Look at the US. The markets over there are in the process of blowing a top. DOW 13500 by next week anyone
Whatever it reaches as its final blowoff and then retractment then a try and failure for new highs alas a 87 type crash.
DOW last 17 trading days 8 up 1 down
7 up one down
now tonight? up again.
judging by posts another good indication (everyone aboard)

Might get a down night tonight. US Consumer confidence, RE prices down.

(Could just be interpreted as bullish however )

 

[bean]

Nope looks like it will be up blast off

 

[wayneL]

Nope looks like it will be up blast off

The wheel is still spinning... place yer bets.

 

[wayneL]

The wheel is still spinning... place yer bets.

BTW ignore the unrepresentitive DOW. The SP500 is down 4 as I hit the send key

 

[CanOz]

The wall St. Mini punctured support. The tech100's leading the way a bit too. Wish i could stay awake to short this.

Good trading all.

cheers,

 

[bean]

volume is high on US markets for this early hour

 

[bean]

I have been posting on price of gold watching the current market moves DOW and all down a laggard if you like in gold stocks ia moving positive.
I also say that the markets and gold stocks moving together (in line) Even though terrible news market down they will finish up tonight

 

[nizar]

volume is high on US markets for this early hour

Yeh the bulls are very resilient.
Agree with Wayne - its really IBM (+4.0%) and Texas Instraments (+7.7%) thats holding the DOW up.
S&P500 down by almost 6pts at the minute.

 

[wayneL]

Even though terrible news market down they will finish up tonight

I would not be surprised.

 

[Uncle Festivus]

The Dow Jones Industrial Average jumped 135.95 points to 13,089.89, after having crossed the key level 13,000 for the first time. It struck an intraday record of 13,107. Twenty-nine of the 30 Dow components ended in positive territory.
"In and of itself, [Dow 13,000] is not very important for the market," said Jay Suskind, director of trading at Ryan, Beck & Co.
"Psychologically, it shows the market has been doing well and draws retail-type investors," he said. "But this may not be such a good thing, as retail investors often show up late to the party."

 

[chops_a_must]

The Dow Jones Industrial Average jumped 135.95 points to 13,089.89, after having crossed the key level 13,000 for the first time. It struck an intraday record of 13,107. Twenty-nine of the 30 Dow components ended in positive territory.
"In and of itself, [Dow 13,000] is not very important for the market," said Jay Suskind, director of trading at Ryan, Beck & Co.
"Psychologically, it shows the market has been doing well and draws retail-type investors," he said. "But this may not be such a good thing, as retail investors often show up late to the party."

I hope we aren't trying to find stuff to justify us telling the markets what they should be doing...

To me, I've always thought and been told that retail investors don't usually have the power to move markets. But then again, I'm always amazed at the power of people's stupidity, and have learnt never to under-estimate it. Lol.

But as the markets race to record highs, and as no one is wanting to get hit by a bus by putting shorts on, maybe it is time to start looking at these things we thought would crumble markets? I don't necessarily agree with what I am going to say, but perhaps we need to re-assess them?

My first point would be, (and I guess this relates to the US markets more than us) that the US economy has been growing very strongly for a number of years, so why shouldn't it be setting record highs? The gold price has also come down at the same time the DOW climbs... typically a bullish signal...

Even if the US economy is structurally stuffed long term, it might not affect company profits for a while, if at all, if production is continually going offshore with cheaper labour, and fewer tarriffs etc. So perhaps the US economy is beginning to detach from its markets? I guess the case in point there would be the DOJI outperforming the S&P 500 as the companies in the S&P have less capability for moving offshore.

The other factors may be the share buy backs and weaker USD. If, as they say, 4% of stocks will be bought back from companies on the DOJI and S&P... so logically, shouldn't both of these indexes go up by a minimum of 4% this year?

The weak USD may also be inflating the US stockmarket if foreign money is coming in. Plus, it will be helping exporters.

Lastly, maybe the sub-prime melt down is not going to have a short term impact. Although, it will eventually undoubtedly. But people defaulting on sub prime loans would typically not be able to invest in markets, and this lending facility has not spread to companies on mass outside of the financial sector... yet. However, GM have said that sub-prime is the reason they can't sell their crap cars... I'd say it's more likely due to the fact that they are selling crap cars, as the reason they can't sell their crap cars... but anyway. Personally, I think this will end up affecting consumer spending in 6 months to a years time.

And one important point. It's a presedential election year. Historically, these are the best years to be in the market.

Not sure how much of this I believe... just vomiting my thoughts out to see if they have merit.

 

[bean]

I hope we aren't trying to find stuff to justify us telling the markets what they should be doing...
And one important point. It's a presedential election year. Historically, these are the best years to be in the market.

And to be sure the market won't crash just because its a election year.
Yes the market will tell us if this is the final blowoff which may finish early next week as it takes a breather and retries and can't take the top out.

But no need to worry its an election years
Remember that as it falls

 

[Uncle Festivus]

There was bullish company news for the US markets last night that should have given it some impetus & all they could do was flatline at best. It's either a breather before the next assault or a rounding exhaustion top. Doesn't say much for when the reporting season finishes, ie finish looking at past data, & get back to focusing on the fundamentals & future prospects for profit growth 'going forward'.

It also looks like the real estate bust is spreading to other countries. Problems in Spain have the potential to rock the Euro boat.

 

[bean]

I have made up various programs on DOW US markets and gold etc.
The DOW has been Up, its short term trend up. I have been saying the DOW in a final blowoff. I have aslo said the NASDAQ above 2550 will be back in bubble territory. 2554 yesterday and 2557 today.
If I enter monday as a down day the NASDAQ will turn its trend to down and it doesn't have to be a big day down. If Monday is down and continues for tuesday it is set up for a 2% - 3% down day on NASDAQ tuesday.
Is the top in I do not Know but will wait for what happens monday.
It may be a short term top is in?

The DOW may rise but the NASDAQ ? The DOW may carry the NASDAQ higher?

 

[nizar]

There was bullish company news for the US markets last night that should have given it some impetus & all they could do was flatline at best. It's either a breather before the next assault or a rounding exhaustion top.

It was poor GDP data (showing slower growth) that made the futures weaken before the open.
They've had a big week over there, 4 days up out of 5 and up 1.2% for the week. You cant expect green everyday.

 

[Uncle Festivus]

It was poor GDP data (showing slower growth) that made the futures weaken before the open.
They've had a big week over there, 4 days up out of 5 and up 1.2% for the week. You cant expect green everyday.

The Dow goes up, S&P500 flat. Which one is telling us the real story?
FWIW, I've gone short the DJIA.

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While euphoria sweeps stock markets here and worldwide, there are at least a few voices of dissent.
One, unsurprisingly, is legendary value investor Jeremy Grantham -- the man Dick Cheney, plus a lot of other rich people, trusts with his money. Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years. But he has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes.

Everything is in bubble territory, he says.
Everything. 'The bursting of this bubble will be across all countries and all assets.'
-- Jeremy Grantham

http://biz.yahoo.com/ts/070427/10353243.html?.v=3

 

[Kimosabi]

The Dow goes up, S&P500 flat. Which one is telling us the real story?
FWIW, I've gone short the DJIA.

----------------------

While euphoria sweeps stock markets here and worldwide, there are at least a few voices of dissent.
One, unsurprisingly, is legendary value investor Jeremy Grantham -- the man Dick Cheney, plus a lot of other rich people, trusts with his money. Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years. But he has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes.

Everything is in bubble territory, he says.
Everything. 'The bursting of this bubble will be across all countries and all assets.'
-- Jeremy Grantham

http://biz.yahoo.com/ts/070427/10353243.html?.v=3

I like the last statement,

As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.

We still haven't seen the irrational exuberance phase yet, but I think it's coming...