On Wall Street: Beware of the sucker’s rally

[celticlord]

FT.com / Markets / On Wall Street - On Wall Street: Beware of the sucker?s rally

Bear markets typically end with a whimper rather than a bang, casting doubt on the latest recovery according to Hussman Econometrics, which analysed numerous US market bottoms and bear market rallies. With the exception of the 1987 crash, the month before the lowest point of a downturn saw a gradual descent. By contrast, bear market rallies were preceded by steeper declines and had sharper rebounds. Another characteristic of bear market rallies has been modest volume on the rebound compared to the decline. The current recovery fits the pattern of bear market rallies in terms of volume and the “V” shape of the trough. Analysts at Bespoke Investment Group noted that there have been only seven other periods in the past 110 years with rallies of similar magnitude for the Dow. Three preceded the Great Depression, three came during the Depression and one in 1982.

In other words, the "green shoots" Dear Leader and others are willing into existence are more likely just a bounced reality check.

Sustainable economic growth requires the recession hit rock bottom first, and the ease with which some market players revert to their former optimism means the bottom has not yet been reached.

Damn.

 

[Jessica]

Good advice. I've been telling everyone the same thing. They think because stocks went up a few points, that everything is okay and the crisis is over.

 

[DarkWizard12]

FT.com / Markets / On Wall Street - On Wall Street: Beware of the sucker?s rally



In other words, the "green shoots" Dear Leader and others are willing into existence are more likely just a bounced reality check.

Sustainable economic growth requires the recession hit rock bottom first, and the ease with which some market players revert to their former optimism means the bottom has not yet been reached.

Damn.

Encourage dear leader to keep raising confidence. Once the markets relapse, I predict that will be the permanent end of the dems in 2010.

 

[celticlord]

Encourage dear leader to keep raising confidence. Once the markets relapse, I predict that will be the permanent end of the dems in 2010.

A market relapse won't spell the demise of the Democrats, any more than the 2008 elections spell the demise of the Republicans.

The only way the Democrats are done for is if the coming market reversal results in a long-overdue anti-incumbent backlash against both parties, and both Democrats and Republicans are dumped on the trash heap.

 

[Jessica]

Both parties died in 1913.

Neither party will sustain through a new world order nor will they be pertinent.

 

[Mach]

Leaders actually influence the market, psychology has been and always will be a significant factor in the market.

He will be damned if he talks about how bad things are, and he will be damned if he talks about the green shoots.

You know this, the same thing happened with Bush, although he said things like "the economy is strong", which weren't so much optimistic as just entirely the opposite of reality. Read any non-partisan discussion on this, it's just the way it is.

They have to ride the line between the two. Don't focus on the negative, be realistic, but overall positive. After all, we do want an optimistic president, but not an unrealistic one, correct?

After all, are you not confident or at least optimistic that we will emerge from this recession? I am. Would you prefer the president to declare the opposite, and for what reason?

 

[SFLRN]

Leaders actually influence the market, psychology has been and always will be a significant factor in the market.

He will be damned if he talks about how bad things are, and he will be damned if he talks about the green shoots.

You know this, the same thing happened with Bush, although he said things like "the economy is strong", which weren't so much optimistic as just entirely the opposite of reality. Read any non-partisan discussion on this, it's just the way it is.

They have to ride the line between the two. Don't focus on the negative, be realistic, but overall positive. After all, we do want an optimistic president, but not an unrealistic one, correct?

After all, are you not confident or at least optimistic that we will emerge from this recession? I am. Would you prefer the president to declare the opposite, and for what reason?

It is worth noting that the President could affect the short-term through psychology (or market sentiment). However, (as I'm sure you know) if there isn't some "real" correction in the economy the problems that caused the recession before have the potential to cause another recession (or other problems that arose from our response to this recession could spell trouble down the road).