Recovery or Dead Cat Bounce?

wonderrman · 26 March 2009

I've said it many times before but the long-term situation in the United States looks to be dissasterous. Who knows how long it will take for the mess of a country to fall over on it's waste side, charts that we love can't tel you that. One would probably think a few years. The burst of optimisim around the world is truely amazing, when really nothing has changed.

That doesn't stop you trading the markets though. There is always something out there to look at, and from a charting perspective, one should take each case as they come. CVN looks to be a perfect buy from a charting stand point.

The point is, yes the world is in the ****, but it doesn't mean that there are no opporunities out there.

The question regarding bottom or dcb is still being asked. Personally I think we will experience quite a long bear market, where 30,40,50% rallies can be expected. The problem of debt overload cannot be fixed over night, the world has to deleverage itself to normal levels, this could take years, and that is when we might see the bottom.

From a 'fundamental' perspective, I would not be buying now for the 'long-term' unless you were going to lock away the key for 10 yrs.

mitch87 · 26 March 2009

this is make or break for the us markets tonight and friday

if the economic data is bad, and the dow falls 2,3,4%, GOD help us all
if it can sustain current levels and break the 7850 mark, we may be in for some more upside before it gets worse

nomore4s · 26 March 2009

Can the bears please tell me when they finally decide to buy in, so I can sell out as that will be just about the top of this rally:

Anyway it's clear the bottom is in - YT is back in the market:
(This is a joke - I'm not calling a bottom)

nomore4s · 27 March 2009

From a charting perspective we're approaching some resistance at around 3700, will be interesting to see what happens in the next few trading days. A break through 3700 could bring 4300-4500 into play. A rejection of 3700 and failed support at 3500 could see us retest the lows.
I think we will see some consolidation under 3700 and then hopefully a break higher.

Also look at the volume and the effect it has had especially the really big vol, doesn't appear to be many sellers left atm.

Whiskers · 27 March 2009

Garpal Gumnut said:
Markets don't just shoot back up after a severe downtrend such as this.

gg

Just curious as to your reason, why not, gg?

Since the market is more about confidence than values, Obama's talk of and apparently starting to take some real action on better regulating the markets including some that were previously lightly regulated noteably the insurance industry, I can imagine quite a reasonable recovery if you believe that the correction was overdone on a complete loss of confidence.

For me the market could have stabalised last year if Bush had carried through on his litle burst of rhetoric to tighten up regulation of the markets, to restore confidence... but as we now know he waffled and blundered through most things he touched and the markets went with his populatity.

derty · 27 March 2009

Whiskers said:
For me the market could have stabalised last year if Bush had carried through on his litle burst of rhetoric to tighten up regulation of the markets, to restore confidence...

Can you please explain this to me Whiskers?

My understanding is that by last year the crash was well and truly set in motion. I cannot see how tightening regulations last year would have averted any of the carnage we have seen, particularly in the last 6 months. It would be akin to tightening the screws on your chook house door after the fox had already slaughtered all your chooks.

nunthewiser · 27 March 2009

Uncle Festivus said:
4th qtr US GDP out tonight, but if that don't budgit then..NFP

Tuesday 3 April?

http://online.wsj.com/mdc/public/page/2_3024-EconomicCalendar.html?mod=mdc_h_cmgrel

lol heres an ozzie headline

US 4th quarter GDP drops 6.3%
The US economy contracted at a hefty 6.3 per cent pace in the fourth quarter

heres a yahoo one

Oil rises in Asia on positive US data, stocks- AP

then this one from yahoo after

Economy Dips at Slightly Faster 6.3 Percent Pace, Better than Expected- AP
The economy shrank at a 6.3 percent pace at the end of 2008, the worst showing in a quarter-century, and probably isn't doing much better now

gotta love em

Whiskers · 27 March 2009

derty said:
Can you please explain this to me Whiskers?

My understanding is that by last year the crash was well and truly set in motion. I cannot see how tightening regulations last year would have averted any of the carnage we have seen, particularly in the last 6 months. It would be akin to tightening the screws on your chook house door after the fox had already slaughtered all your chooks.

Yes it was well in motion, but from what I've read helped along by the mark to market issue with their accounting standards.

I understand there has been some strong views that the insistency to mark to market all assets made no distinction between short and long term assets. The case basically went along the lines that the mark to market accounting rule took no account of cyclical swings in the markets nor treat longer term non-current assets differently to current assets.

Recently there has been some interest in the congress to ammend their accounting standards to recognise and or treat the different classes of assets differently.

Their arguement is that the compulsion to mark to market as it currently stands valued everything on the books at fire-sale values and exponentionally compounded the devaluation of the assets and market.

PS: I suppose I meant tighten and rationalise their regulations. There seems to have been a very long time of not reviewing standards, regulations or anything much to account for the changing dynamics of the world economy and markets.

dhukka · 27 March 2009

Whiskers said:
Yes it was well in motion, but from what I've read helped along by the mark to market issue with their accounting standards.

I understand there has been some strong views that the insistency to mark to market all assets made no distinction between short and long term assets. The case basically went along the lines that the mark to market accounting rule took no account of cyclical swings in the markets nor treat longer term non-current assets differently to current assets.

Recently there has been some interest in the congress to ammend their accounting standards to recognise and or treat the different classes of assets differently.

Their arguement is that the compulsion to mark to market as it currently stands valued everything on the books at fire-sale values and exponentionally compounded the devaluation of the assets and market.

PS: I suppose I meant tighten and rationalise their regulations. There seems to have been a very long time of not reviewing standards, regulations or anything much to account for the changing dynamics of the world economy and markets.

Jaysus Whiskers, you've had months to invent excuses for your complete ineptitude and this is the best you could do?

Mark to market is the latest scapegoat for incompetent and insolvent institutions to blame their reckless speculative investment decisions. The fact is more than 70% of bank assets are NOT subject to mark to market, a fact that seems to go unreported. To their credit, Goldman Sachs is actually against relaxing mark to market rules.

Furthermore, mark to market is not required for securities held to maturity, but you need to demonstrate a "positive intent and ability" that you will do so. So there is a distinction between longer and shorter dated assets.

The idea that the market could have avoided steep falls last year through stricter regulation is complete and utter nonsense, the seeds were sown years in advance.

Whiskers · 27 March 2009

Hi dhukka... long time no see! :

I thought I'd previously made my opinion of the excesses and abuses of the system by a relative few to the detrement of the masses, pretty clear.

The point I make here is that the cyclical correction that we had to have has probably been exaggerated by a few extra things such as those I've just briefly mentioned and that you kindly point out more of the difficulties with preventing assets from being fire-sale valued.

MRC & Co · 27 March 2009

nomore4s said:
From a charting perspective we're approaching some resistance at around 3700, will be interesting to see what happens in the next few trading days. A break through 3700 could bring 4300-4500 into play.

Or a break of 3700 to the 3800s could get all the breakout players in, before they sell us off again. More likely in this environment I would think.

Aussiejeff · 28 March 2009

OK.

Fess up.

Who killed the gay bouncing kitty last night? :angry:

MrBurns · 28 March 2009

Aussiejeff said:
OK.

Fess up.

Who killed the gay bouncing kitty last night? :angry:

Me when I decided to buy BSL late yesterday.

I can now spend all day Monday watching it shrink.

Aussiejeff · 28 March 2009

MrBurns said:
Me when I decided to buy BSL late yesterday.

I can now spend all day Monday watching it shrink.

Oh.

Poor shriveling Puddy-tat..

MrBurns · 28 March 2009

Aussiejeff said:
Oh.

Poor shriveling Puddy-tat..

As Buffet always said , when Burns is buying it's time to get out !

Glen48 · 28 March 2009

Thanks Mr B can you let us know when you are buying again?
Maybe a name change could help some thing like Rising Stocks, Never Burnt?

MR. · 28 March 2009

MrBurns said:
Me when I decided to buy BSL late yesterday.

I can now spend all day Monday watching it shrink.

I remember 9 months ago the Eureka was pointing towards BSL. I'm sure there is a better chance of an increase now.

Is it predictable that bears such as yourself decide to buy now once the market has already just risen? Left behind? Maybe that just keeps that ball on rolling. Never mind, forget my comments. wishing you well.

arae · 28 March 2009

I'd say this is more of a bear hug. They're still some sharp claws wrapped around our backs.

MrBurns · 28 March 2009

I'm was just busting to buy something so I did.

Will get out soon I guess, no big deal.

baboon · 28 March 2009

Never try to pick bottoms, because all you get is smelly fingers!

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