Comments on: Market rally - Is it for real?

By: RC

RC — Wed, 28 Nov 2007 21:19:10 +0000

Where is the liquidity problem? If a rumor of an interest rate cut can stimulate the stock market to a 350 point gain where is the liquidity problem? Apparantly, someone has alot of cash!

By: george mitchell

george mitchell — Wed, 28 Nov 2007 21:15:40 +0000

For the past 12 years the stock market has closely tracked the housing market, except recently. If the correlation comes back to norm the market would drop dramatically.

The single family index has dropped 50% in a year, far more than the S&P.

What would sever the linkage? Major and rapid interest rate drops? We’ll see.

By: jerry

jerry — Wed, 28 Nov 2007 20:57:58 +0000

the market down 10% housing down recession looming? arnt we in a recession now? when the usd rises this means we are in recession as the $ becomes more valuable this shows the dollar buys more. rates cuts will not change any thing as the $ is getting harder to get, less borrowings to get. in all traders will send you broke dont follow the market as a guide to the economy

By: Juan

Juan — Wed, 28 Nov 2007 20:27:29 +0000

It seems investors are pricing stocks just like credit rating agencies rated sub-prime mortgage SIVs…

Fed rate is an important element of valuation but for the last couple of years it has been given way, waaay too much attention.

By: Aleks

Aleks — Wed, 28 Nov 2007 20:24:27 +0000

Are the banks out of the woods?

No, I’m afraid they haven’t passed the trough quite yet. The tricky situation that we’re in has given more than ample indication that delinquencies have not reached their peak, while home prices will continue to sag. To get out of this mess, the continued flow of available credit is an important variable to follow.

The fate of this rally obviously depends upon expectations of what the Fed will do, and not upon the fundamentals of the economy. The latter is precisely why I don’t believe this rally will last very long at all. For even if the Fed were to further cut rates, I think it’s clear that at this point, lower rates do not quite equal a concrete, visible, turnaround. And that is why stocks may enjoy a temporary run up, only to be depressed once again.

By: Jackson Potato Peal

Jackson Potato Peal — Wed, 28 Nov 2007 20:19:41 +0000

This may be the last day the waves pickup the potatoes. But many new snouts will turn into the box

By: yves C

yves C — Wed, 28 Nov 2007 19:44:08 +0000

the market is not stable at -10% . People looks the past profits to guess the next profits. so, till profits of the companies outside financials are not under real pressure by a general slowdown, the market is due to bounce to 1500 easily. There was too much pessimism recently, easy to see with the divergences on oscillators and inverted HS on Nikkey. The job of everybody is to buy stocks, not to sell them ! At the last Fed , SP was at 1485. so….

By: Patrick S

Patrick S — Wed, 28 Nov 2007 19:04:23 +0000

I think it funny that the Fed pretends this “turbulence” is the result of natural business cycles, when it is obvious its the Fed’s secretive ways with no one knowing what rate scheme they will concoct next.

By: Gene

Gene — Wed, 28 Nov 2007 18:41:20 +0000

While I would agree that some trading programs would be triggered by the “correction” hitting 10%, it would be a very poorly programed plan that kept buying after noon EST today (and yet they are apparently still buying). It could have something to do with covering shorts as well, but the kind of in and out flows of capital we’ve seen are far more systemic. With trillions of dollars going “poof” in housing values and the various instruments associated with them, it is hard to fathom that the market will sustain this level for very long.

By: Patrick

Patrick — Wed, 28 Nov 2007 18:19:51 +0000

The market has been such a rollercoaster, it’s hard to believe that what goes up will not come down.