Recovery or Dead Cat Bounce?

[Aussiejeff]

As Oliver would say... "Please Sir, can I have some more."
Probably already factored into the market though


US Treasury injects $US7b more into GMAC
http://news.theage.com.au/breaking-...njects-us7b-more-into-gmac-20090522-bhjw.html

Indeed, Gumby

BTW does anyone know what the TOTAL staggering cost so far for the US Treasury aka "The American Taxpayer" to bailout both GM & GMAC amounts to?

 

[investorpaul]

If this does continue and forms another down leg I wonder if the short selling ban will be extended for the banks.

I dont think they will because they said the main reason the ban was extended was to allow for capital raising's, given most have completed this they dont seem to have an argument for extending it again.

Im lining up a few short CFD trades on the banks should this down leg continue and the ban be lifted.

 

[Temjin]

No one ever ponder the question how public debt can ever raise faster than GDP forever. It's mathematically unsustainable. So simple to understand, yet the green shots ignore it.

The same goes for private debt. It can never raise faster than income growth because interest rate will never go negative.

Now since S&P is downgrading the Pound outlook from "neutral" to "negative", you can be VERY SURE that they will do the same for the US dollar. And potentially Aussie dollar one day when our government realise this is not a typical recession because it was originated from a financial crisis! Historically, recessions (or depression) resulted from financial crisis last MUCH LONGER than a typical one. Their budget forecast will be totally off and will put our country into an even higher deficit.

I just don't understand the mindset of these green shots. Until they are all beaten down and sincerely believe there is no hope for the equity market, then any rallies will still be a dead cat bounce.

 

[MS+Tradesim]

If this does continue and forms another down leg I wonder if the short selling ban will be extended for the banks.

I dont think they will because they said the main reason the ban was extended was to allow for capital raising's, given most have completed this they dont seem to have an argument for extending it again.

Im lining up a few short CFD trades on the banks should this down leg continue and the ban be lifted.

You can short financials in the ASX50 using ASX CFDs. The spread is not great but if you take some time you can get better entries and exits.

 

[investorpaul]

You can short financials in the ASX50 using ASX CFDs. The spread is not great but if you take some time you can get better entries and exits.

thanks MS Trade I didnt know that, I only use IG markets at the moment but I did get all the paperwork from commsec to trade ASX CFDs i better fill it out quick smart.

 

[MS+Tradesim]

InvestorPaul,

They have some quirks. Keep an eye on the "Notices" section to see how corporate actions, changes in margins etc affect them.

http://www.asx.com.au/products/cfds/features/index.htm

 

[Aussiejeff]

Dead cat bounce?

Hark, the meece are coming - armed with little picks & shovels to bury the stinking moggy.

 

[RayG]

I just don't understand the mindset of these green shots. Until they are all beaten down and sincerely believe there is no hope for the equity market, then any rallies will still be a dead cat bounce.

I would like to see some hard data, but I have heard several commentators say in recent weeks, that there is the highest ratio of cash (sitting on the sidelines) to equities, in history. If true then there are a large number of investors who have missed the rally, when they finally relent and get back into the market the real rally will kick in,

The question in my mind, is how much of a drop will it take before the fear of missing the buying opportunity of a lifetime gets that money back in play.

Gazing into crystal ball..... XAO = 3500 magically swims into view..

Then the real fun begins...

Regards
Ray

 

[Wheep0]

Probably just playing with words, but I understand it as follows.
Greed is a bullish sentiment (buy buy buy), and fear is a bearish sentiment. (Ok you can call bears who short-sell greedy), but generally, bearish sentiment is fear of stock prices falling (sell sell sell), that the world is about to end == doom and gloom == bearish



I would like to see some hard data, but I have heard several commentators say in recent weeks, that there is the highest ratio of cash (sitting on the sidelines) to equities, in history. If true then there are a large number of investors who have missed the rally, when they finally relent and get back into the market the real rally will kick in,

The question in my mind, is how much of a drop will it take before the fear of missing the buying opportunity of a lifetime gets that money back in play.

Gazing into crystal ball..... XAO = 3500 magically swims into view..

Then the real fun begins...

Regards
Ray

Small retrace ahead, ripple effect +/- 100 point scenario for a week or so, S&P 500, DJIA should bounce of the retrace end next week. Yanks love a good holiday as well and will come out feeling warm and cosy, news last week was one negative after another and still the DJIA held the weekly ripple pattern..Just got to ask yourself ,how long can the negatives keep coming.. firmly believe we are getting ready for a global upturn by middle Q4.. Market will take that in with the usual 4- 6 months pre note sentiment and that coupled with the unprecendented sell off over the last 8 months will make very interesting times. Got to be in it to win it...

I held all my long positions..decided this world in 2009/ 2010 just got to much catch up to do for me to sell anything out, took me 6 months to have the balance I want, even though profits could be taken now that are pretty awesome, just to much upside over the next 24 months for me to even think of selling up now..
My bulk buying was done and dusted in Feb / March , now to let the seeds grow.

Black swans, well cant rule those out for sure, but truly feel we have had the fill of them for the next few years...Im more than happy to keep an amber alert up on my long term positions..

Follow your own head, do what you feel is right, everyone is different, with their own views on where we are going...

Carpe diem.
Wheep0

 

[mazzatelli1000]

Black swans, well cant rule those out for sure, but truly feel we have had the fill of them for the next few years...Im more than happy to keep an amber alert up on my long term positions..

Wheep0

Maybe it is my personal interpretation, but black swans are unpredictable and by the time it hits you would be in the red already.

Of course traders/managers say they will be sufficiently ready for the next black swan....and so the cycle repeats itself

 

[zacaxel1975]

Maybe it is my personal interpretation, but black swans are unpredictable

Its the white swans that are predictable, everyone sees those suckers coming, the black ones fly up your a-hole before you even feel your cheeks tingle.

 

[mazzatelli1000]

Its the white swans that are predictable, everyone sees those suckers coming, the black ones fly up your a-hole before you even feel your cheeks tingle.

Ill remember this analogy, will keep my feet firmly on the ground when trading
haha

 

[zacaxel1975]

Ill remember this analogy, will keep my feet firmly on the ground when trading
haha

May your trading be swan fee

 

[Trevor_S]

http://online.wsj.com/article/SB124302634866648217.html

I know most of you don't think much of Messrs. Graham or Bufett, none the less I thought the above article interesting in the context of this thread.

Even after recent turbulence, the Dow Jones Industrial Average is up roughly 30% since its low in March. It is natural for you to feel happy or relieved about that. But Benjamin Graham believed, instead, that you should train yourself to feel worried about such event

 

[Uncle Festivus]

So is this the logic of the permabulls -

"the market has gone down, so now it must go back up"

"surely all the bad news has been priced in"

"the market is forward looking, so according to previous reccessions which lasted [insert timeframe here] we will now see the end of the current recession within [insert timeframe here] months"

"I/we can see green shoots in the economy" (translation - things are still gettting worse, just not at an parabolic rate anymore???)

How about putting some facts and figures forward to support your views, rather than basing your case for a new sustainable bull market on hope, and the continued & co-ordinated rhetoric from the Goldman Sachs cheer squad & vested interests??

For the best that can be made at this point is that we could be in for an L shaped period of golbal economic stagnation, Japanes style, for years to come.

Remember, all those buy & hold investors who purchased shares after about November 2004 are, at best, only breaking even - not exactly the types to start buying in any hurry?

Then you have the self funded retirees - taking a serious haircut on their portfolios - may have to work longer, taking employment away from the new generations of school leavers?

This is a sytemic change in the world economy; it's going to take a lot longer to sort this one out, if at all?

 

[Uncle Festivus]

http://online.wsj.com/article/SB124302634866648217.html

I know most of you don't think much of Messrs. Graham or Bufett, none the less I thought the above article interesting in the context of this thread.

So, in his opinion, stocks are back to being fully priced, on a P/E metric? Where's the next leg up going to come from? Especially if another downward revision in the E part of the equation eventuates, which would make the current stock values overbought?

Above all, that means resisting the contagion of Mr. Market's enthusiasm when stocks are suddenly no longer cheap.

Buffett has recently been reported to have stopped buying anything, because he is low on cash after his disasterous investment losses and 'opportunistic' forays into Fed subsidiaries like Wells Fargo. He's well and truly latched onto the US Fed's gravy train. How about this black swan - Buffett files for Bankruptcy?

 

[Glen48]

Weeds start of as green shoots as well.. these one are planted in toxic debt so they are doomed to die just like Fairyruddmother one term in office.

 

[Temjin]

Probably just playing with words, but I understand it as follows.
Greed is a bullish sentiment (buy buy buy), and fear is a bearish sentiment. (Ok you can call bears who short-sell greedy), but generally, bearish sentiment is fear of stock prices falling (sell sell sell), that the world is about to end == doom and gloom == bearish

For a person to be bearish on the stock market does not necessary mean he/she is bearish on practically anything with the economy. If you have followed the commentaries of those very independent analysts/investors who have long predicted this crisis and have acted to protect themselves, along with advice to profit from this, you will know they taking FULL ADVANTAGE of this "gloom and doom".

There will always been a bull market within a bear market. The stock market cannot be seen as a single entity. Being bearish on the financial sector does not mean being bearish on the resource/energy/precious metal sector, especially on the lower end.

I would like to see some hard data, but I have heard several commentators say in recent weeks, that there is the highest ratio of cash (sitting on the sidelines) to equities, in history. If true then there are a large number of investors who have missed the rally, when they finally relent and get back into the market the real rally will kick in,

The question in my mind, is how much of a drop will it take before the fear of missing the buying opportunity of a lifetime gets that money back in play.

Gazing into crystal ball..... XAO = 3500 magically swims into view..

Then the real fun begins...

You have only followed the "greenshot" commentators and none from those who have predicted the crisis.

I have included an attachment as part of the hard data. There are plenty more out there, but it's totally scattered. Barry Ritholtz from the famous Big Picture Blog has recommended his readers to follow David A Rosenheg's daily commentary. It's a very good read in my opinion.

Remember, whether we will have a recovery will largely dependent on the US. You cannot have a bull market in the ASX200 and a bear market in DOW JONES.

 

[wonderrman]

So is this the logic of the permabulls -

"the market has gone down, so now it must go back up"

"surely all the bad news has been priced in"

"the market is forward looking, so according to previous reccessions which lasted [insert timeframe here] we will now see the end of the current recession within [insert timeframe here] months"

"I/we can see green shoots in the economy" (translation - things are still gettting worse, just not at an parabolic rate anymore???)

How about putting some facts and figures forward to support your views, rather than basing your case for a new sustainable bull market on hope, and the continued & co-ordinated rhetoric from the Goldman Sachs cheer squad & vested interests??

For the best that can be made at this point is that we could be in for an L shaped period of golbal economic stagnation, Japanes style, for years to come.

Remember, all those buy & hold investors who purchased shares after about November 2004 are, at best, only breaking even - not exactly the types to start buying in any hurry?

Then you have the self funded retirees - taking a serious haircut on their portfolios - may have to work longer, taking employment away from the new generations of school leavers?

This is a sytemic change in the world economy; it's going to take a lot longer to sort this one out, if at all?

AMEN!

 

[Wheep0]

So is this the logic of the permabulls -

"the market has gone down, so now it must go back up"

"surely all the bad news has been priced in"

"the market is forward looking, so according to previous reccessions which lasted [insert timeframe here] we will now see the end of the current recession within [insert timeframe here] months"

"I/we can see green shoots in the economy" (translation - things are still gettting worse, just not at an parabolic rate anymore???)

How about putting some facts and figures forward to support your views, rather than basing your case for a new sustainable bull market on hope, and the continued & co-ordinated rhetoric from the Goldman Sachs cheer squad & vested interests??

For the best that can be made at this point is that we could be in for an L shaped period of golbal economic stagnation, Japanes style, for years to come.

Remember, all those buy & hold investors who purchased shares after about November 2004 are, at best, only breaking even - not exactly the types to start buying in any hurry?

Then you have the self funded retirees - taking a serious haircut on their portfolios - may have to work longer, taking employment away from the new generations of school leavers?

This is a sytemic change in the world economy; it's going to take a lot longer to sort this one out, if at all?

Facts, history is your fact..Basic modern history will tell you that
If at all?
Donnie Darko sentiment there.....
Trouble is majority of bear`s are seeing the end of their own bull market,seen a glimpse already in the last 2 months and they dont really like it one bit.
You can quote a host of media frenzied bear forecasters into what they think,
reality is bulls pay as much attention to those as we do our wives...
forward thinking, so what if it takes 2 -3 years. Agree it will, but hey I cant see we gonna drop to a new low from here, as much as you all hope it will to satisfy your negativity and pessimism.

My buyings done on a 3600 - 3200 index.....50% job done...
12-36 months. Sell- job complete !
You lot will still be moaning and trying to short sell.
wheep0