Australian (ASX) Stock Market Forum

Stock markets are not forward thinking

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Take for example the last 4 weeks of good news stories and optimisim and look whats happened to the markets. If we say the markets look ahead 4 to 6 to 12 months ahead, why did the market not factor in all this suprisingly good news months ahead of schedule and start rising. No, it started to rise spot on good news stories and good figures, or better than expected figures. I reckon markets still react more to the now, the present, a few days/weeks in advance, but certainly not months or even years ahead.

Next week kicks off the reporting season in the U.S., it will be ugly over coming weeks thats for sure, but just how ugly will it be?

I say the Dow Jones will hit a new low in April as it factors in the daily company reports which will certainly be very dismal.

Care to comment:D
 
As a follow on from the previous post it was just 4 weeks ago that the Dow Jones hit fresh new lows, but how can it hit lows when 4 weeks ahead (present) all this good news sprung out of thin air. Hence my argument still remains, stock markets are not as forward thinking as we may suggest.
 
That again is my argument that the failing of GM and rising unemployment are a dead set given in this current climate, but somehow the market failed to factor in 4 weeks of amazing thin air stores of leaders saving the economy, money printing, toxic assest clearing etc etc. The markets tanked for the most part of Jan and Feb and part of March
 
why do we all think markets are forward thinking? they are not going by recent examples
 
The news is not good, just perhaps a little less bad. On that the markets are trying to anticipate an economic turnaround at some point in the future (4 to 6 to 12 months ahead ?). At present levels markets still factor in dismal corporate results.

The key as I see it is the extent to which confidence is restored to credit markets. If share markets hit new lows in April then that would obviously be a quick and harsh vote of no confidence in what's been done by governments so far.
 
The trend is whats forward looking...day to day and week to week is on the recent news.
 
look at the tech boom,

companies without profits being heavily bought,
--- in anticipation of great FUTURE profits.
 
look at the tech boom,

companies without profits being heavily bought,
--- in anticipation of great FUTURE profits.

same could be said on the mining boom .

tinpots with nothing but a piece of dirt and a good story
 
Same could be said about this G20 summit outcome, global money printing on a grand scale, more false hope and promises:eek:
 
look at the tech boom,

companies without profits being heavily bought,
--- in anticipation of great FUTURE profits.

Sun, Microsoft, Google, Cisco, Intel, Amazon, Yahoo etc

Are delivering those profits.
 
Markets are forward looking.

But I honestly don't think they know what to do at the moment. It's a bit of a mess as seen by the reactions to fundamental news releases.
 
Looking at the Yahoo Finance chart of the DJIA from 1929 to the present there is now an upward turn. When this has happened in the past after a crash it has signalled a major recovery in share prices (with one notable exception) but over a period of several years the gains have not always been hung on to. Could we be going to see a rerun of the 70's where nominal share prices continue flat over the long term (but with marked volatility) but after inflation we see an overall decline in real share prices ?

http://finance.yahoo.com/echarts?s=%5EDJI#chart2:symbol=^dji;range=my;indicator=ke_sd+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Note however that the above chart above is averaged to some extent in that it does not accurately indicate the full depth of all the low points.
 
Parts of the market are forward moving, the next group take advantage of the move and the rest of the market follows. The market is as sharp or as stupid as you want it to be.
 
Gummints now also have a much bigger say in how certain parts of the markets perform - especially in the finance sector.

Many big banks that would otherwise be bankrupt or insolvent are now booking profits and have endless support from gummints to push their SP's higher.

Many gummints have taken substantive stakes in these banks (US prime example).

We know that when all the big banks go up in SP, the whole allied financial markets tend to follow.

Gummints will be patting themselves on the back at how well they have manipulated the SP "recovery" so far.

Whether they can continue to influence the finance markets to boom past anything the ECONOMIC crisis throws at them is a moot point and only time will tell, eh? :cool:
 
Parts of the market are forward moving, the next group take advantage of the move and the rest of the market follows. The market is as sharp or as stupid as you want it to be.

Good post.

The market was showing some signs of strength in late Jan early Feb while it was still making new lows imo.

Who buys at the lows and who sells at the highs?
 
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