Friday, May 29, 2009

The Unstoppable, Indefatigable, and Undefinable Bull Market of 2009

The weather forecasters change their mind a lot this spring. Today was the same dreary mess the last 2 days were, and now the weekend may be a bit wet as well. I still hope to get some tennis in, but you never know. Not too much action today in the markets so the meat of this post may be light, and then onto the usual Friday night programming.

Small Request
Some unfortunate news was learned today. Mike Morgan, who runs the site Mike Morgan Behind Enemy Lines (as well as the much disputed site Goldman Sachs666.com) has suffered a health setback in the form of a heart attack. Mike has undergone successful treatment and is on the mend.

I would ask you to take a moment and wish Mike a speedy recovery. Financial drama can be fun and we all like to dive in deep, but the real important things in life are of course your health, your family, and your happiness. Economic Disconnect sends his best wishes to Mike Morgan and hopes the fellow blogger has a full recovery.

The Unstoppable, Indefatigable, and Undefinable Bull Market of 2009
2009 has seen a vicious move up across the equity markets. There have been some rare pull back days, but the advance has been nonstop for the most part. Sectors across the entire spectrum have rallied. Key breakout areas are withing sight and then who knows how far this toro could ramble.

With such a broad based move to the upside, one should be able to discern some reason for the action. Reading across all kinds of media I have seen various reasons given, all unrelated to each other and isolated islands of thought. Putting it all together I have my reason for the 2009 Bull Market:

I have absolutely NO idea

I am not using sarcasm here. That will come later. I just cannot put together a valid reason for the rally as nothing adds up.

Take a day like today for example. Pretty quiet until the last 30 minutes or so, and then a huge gap up right into the close. I can remember a time when nobody wanted to hold over the weekend because you had no idea what kind of news was going to come out. Now there is a rush to grab for the two day break. Either there is some real confidence out there, those in the know are tipped that any news will be good, or maybe a Friday up day looks nice. Who knows.

Tyler Durden at Zero Hedge loves to look at this kind of stuff and here is his take on today's action:
Going back to today's ridiculous close, the chart below shows it all: the complete tape painting volume spike at the very end of the day speaks for itself. And as computers now simply issue forced stock recall orders to each other, painting the tape wet with manipulative intent and volume spikes into the last 20 minutes of trading every day, their human creators are left on the sidelines, trying to outshout each other as to the reason for why the market keeps rising while the economy keeps tumbling.

Is there ever going to be any transparency in this market again?

That was some move in the last minutes of trading!

The late 90's boom was due to IT overspending and unbridled hope in the Internet. The early 2000's boom was predicated on real estate values and all the associated spending that flowed from that enabled by free credit. Those two bull markets were easy to see in real time, this is not hindsight kind of reasoning.

Today's bull market seems to be built on buying stocks. I am serious, and don't call me surely!

The vast bulk of current trading is being handled by the big boys playing paint the tape. The hope is probably that a market that has risen enough will collect more boats, or something to that effect.

There is some reason behind the buying. I think the theorem goes something like this;
-When all stocks were going to zero, the DOW was at 6600 and the S&P was at 666
-When the credit boom was at full throttle the DOW was at 14,000 and S&P was at 1500
-If you split the difference right down the middle you arrive at DOW 10,300 and S&P 1083
-This seems like a fair compromise

I know, very scientific. This would be my guess and so those would be my upside targets.

The problem with this kind of dart shooting exercise is that there are real realities that have to be confronted:
-Unemployment is till going up. A lot. While the rate has slowed by some weird second derivative amount, the numbers are still shocking
-Foreclosures of course are tracking the jobs and are set to skyrocket as well
-Earnings right now are still too optimistic and the numbers are being met by, drum roll, staff cuts. This too will run out of usefulness

Those are three big ones that come to mind. There are of course plenty more.

So I hereby name the 2009 Bull Market the "Split the Distance Bull" as the exact middle from the bottom to the top is being raced to with abandon. Just remember to abandon ship when we get there!

LOL Cats
It has been a while since the funny kitties have been featured. Here are two:
funny pictures of cats with captions
see more Lolcats and funny pictures

funny pictures of cats with captions
see more Lolcats and funny pictures

Film Clips
If you notice the graphic in the top left of the page you can see it says "Get Him a Body Bag. Yeah". If you know where that is from it is funny, if you do not, all will be unveiled.

The quote comes from the great film "The Karate Kid" and occurs near the end. After Johnny hits Daniels leg, his team mate celebrates wildly. The quote can be heard at the 23 second mark of the following clip:

Love it!

A new era classic is "The Shawshank Redemption". While there are about 5 scenes that qualify for the hall of fame, no other is as powerful as "The Tunnel" (if for some reason you have not seen this film, skip this!!):


Rock Blogging
Of course we shall have some music, I think it is required by law. Well, at least in some states, or states of mind anyways!

My mom always loved the band ABBA. Let's just say they are not my favorite. But there is one song that men all over the world do know, "Dancing Queen". If you have ever been out at a club late night or stayed late at a wedding party this song does cast a magic spell on the ladies, so as a tribute to the power of ABBA, here it is:


In recognition of the great run gold and silver have had this week (and yes it is KILLING ME!!!) take a listen to a vintage Linda Ronstadt performance of "Silver Threads and Golden Needles":


The film "Streets of Fire" is one of my favorites. The soundtrack is just incredible as well. Diane Lane plays the singer, but she did not do the actual singing. Try out "Nowhere Fast":


Wow, a little lady heavy this evening! Time to get things stepped up!

Before Ice-T was on cop shows he was a rapper and he also founded a wicked metal group called "Body Count". Rock out with "There Goes the Neighborhood" (Warning; some rough lyrics, skip if easily offended):


When a band has been around for like 100 years it can be hard to pick a song. Aerosmith has been around since the Dinosaurs died in a fiery meteor impact, and I have selected "What it Takes" for this evening:


Last call!

If you want to really get going, the masters never change. End the night on full rock mode with Black Sabbath's classic "Sabbath Bloody Sabbath":


Have a good night.

22 comments:

getyourselfconnected said...

test comment, blogger on the fritz again!

Lisa said...

There's a lot of speculation about what happened the last few minutes. I'm done speculating. I just don't give a damn. There are still a lot of people trying to get their money out of mutual funds, etc., and I hope this is giving them the time to do so. The market hasn't really advanced for a couple of weeks now. And forget about "consolidation" theories, you actually need buying/selling for that to happen, and it's not. You asked the other day about charts. Forget them, they are broken and worthless. Seriously. Have a great weekend.

getyourselfconnected said...

Lisa,
ouchie! I feel the same way. This stuff is getting close to manufactured. Have a great night and feel better.

PS there were 2 film clips for tonight, I will see what happened. Blogger has been off really bad.

getyourselfconnected said...

Ha Ha,
the film clips are back!
Enjoy!

Anonymous said...

Coming as it did on the last day of the week at the end of a month, some might find the action that took place near today's close to be rather interesting.

From 3:54:28 pm to 4:00:02 pm, S&P 500 e-mini futures rallied 17.25 points on approximate volume of 356,300 contracts, or 19.3% of the total turnover from 9:30 a.m. until futures finished trading at 4:15 p.m.

Hmmm. Manipulation, anyone?
http://tinyurl.com/ndtz4t

Stocks up consumer, confidence up, Government Sachs is on a mission.

The gas station here raised the price of gas 15 cents today after just raising it 15 cents last Thursday now sitting at 2.70. Do we see 4 devalued dollar's a gallon by the 4th of July? Them green shoots are dying on the vine.

Kevin

getyourselfconnected said...

Kevin,
In their infinite wisdom Massachusetts has a gas tax on tap for a vote which started when oil/gas was cheap. Now that 25 cents extra looks pretty bad and polls show it has a 70% against vote. I fully expect it to pass, we are the ultimate fixed system here!

getyourselfconnected said...

Please keep the comments coming! I have to sign off ( I know I am a wimp Lisa) but I have a tennis match at 10am. Thanks to all and I love my bull market name "Split the Distance Bull" as I think that is the clear argument.

GawainsGhost said...

One of the sites I check regularly is Doctor Housing Bubble. He is always informative, and his ongoing series Lessons from the Great Depression is a must read.


Today he has an article on rising default rates for prime mortgages. 1 out of 8 people in the country are either behind on their payments or in foreclosure. That is staggering.

I don't see how the system can handle that kind of volume in the repo market. I mean, only 1 out of 5 Realtors work with repossessed homes, so I'm expecting we'll be getting a lot of new assignments.

But the way things are going I'm not seeing inventory moving as quickly as it did. The market is flooded with repos, and this puts downward pressure on prices. Thus people who are trying to sell their homes, for whatever reason, are finding it difficult.

The whole thing is a mess. I don't see the economy recovering for another two years, if then.

Also, there is an interesting article in the new BusinessWeek by Mohammed El Arian on the new normal. He says it will be radically different. Anyone desperately hoping for a return to status quo ante will be sorely disappointed.

GawainsGhost said...

Hmmm. Market manipulation, who knew?

http://baltimorechronicle.com/2009/052909Lendman.shtml

GawainsGhost said...

LOL! In these trying times, we all need a good laugh.

Wait for it.

http://www.youtube.com/watch?v=W3x769neSeo

watchtower said...

The LOLCats are a big hit with my daughter as usual, she loves "cute" animals at her current age.

If anyone is interested and being as it is the weekend, here is a link to a '72 Firebird that my brother and I are trying hard to duplicate with his car.
I don't believe we will ever get it "Jeff Lilly" right but we are trying.
My brother did manage to get the "Formula" hood like this one has, plus a 400 cu. inch mill and a 400 TurboHydromatic transmission.

http://tinyurl.com/ox7mjs

Anonymous said...

bankers selling our childrens futures..for more bailouts? the disgrace. it's horrible. too big to fail needs to fail. we neeed LESS bailouts. If you fail U fail.

Total credit market debt as a percentage of GDP has risen from 130% of GDP in 1952 to 350% of GDP today. The various bailout and stimulus schemes enacted in the last year will drive this percentage above 400% in the near future. When a country allows this much debt to accumulate versus its GDP, they have done something seriously wrong. The country’s politicians, business leaders, and citizens have all contributed to this disaster.

I came across this interesting site. check it out. tons of economics & finance articles http://is.gd/HGYt

Anonymous said...

do realize that there are two levels at play here. The instinctive, animal level, where we want to punish those who have done us wrong, while those who have done us wrong have done it following their animal desires. There is also the rational level, of which to I am referring to above. Realistically, I know the beast in us will take over and this will end like it did in France in the 1790's. I will, however, not be the one holding the sword.

I came across this interesting site..check it out Econ & Finance Articles Updated Daily

getyourselfconnected said...

Watchtower,
That car was sick awesome.

GawainsGhost said...

I just finished watching this video of a Charlie Rose interview with Chris Kelly and William Cohan on the demise of Bear Stearns. It is fascinating.

http://www.charlierose.com/view/interview/10338

Playing with other people's money is the surest way to drive a firm into bankruptcy.

watchtower said...

@ GYSC
I thought so too, I have never seen an F body that straight before (painted black no less!) and those "old school" Torque Thrust wheels are killer IMO.
Take care.

GawainsGhost said...

Great article over at Naked Capitalism on Sweating the Future of Cars in the US. And an even more interesting read over at Zero Hedge on the statistics of Chrysler dealership closings.

These truly are interesting times.

Anonymous said...

Two-thirds of Americans oppose a plan that would give automaker General Motors Corp. at least $50 billion in funding and the U.S. government a majority stake in the company, a Rasmussen poll found.
http://www.bloomberg.com/apps/news?pid=20601110&sid=ahu2JtSfQR0Y

Ya Think?
Kevin

getyourselfconnected said...

I am working on a car themed post so if interested check back in a bit.

Anonymous said...

Why would anyone want credit to GDP to expand beyond the levels that capsized their systems? What purpose is served by such

unstable levels of credit? Better to maintain private debt to GDP within a range that promotes long term stability.

Let CPI prices gradually fall so that consumers can buy the extra goods made available by increased productivity. Don't force

consumers to borrow unrepayable sums to buy the widgets.
cool site check it out Looking for topical finance & econ articles?

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