The Obama Rally Continues
In January of this year the right wing was up in arms about -- well, everything. Every one of Obama's plans was going to destroy the economy. And from January through March the right wing's favorite barometer was the stock market. Every blog posted charts of the markets when they were moving lower. According to the right wing blogs this was a sign that the US was heading into the abyss and it was Obama's fault.
Now there is a problem with that theory. The markets have been in a rally since early March.
The SPYs (S&P 500) have rallied about 40% from their March lows. Today they broke through important technical resistance. The average has broken above the 200 day exponential moving average indicating we're in a bull market.
The QQQQs (NASDAQ) is up about 50% from its March lows. This average is also above the 200 day EMS indicating a bull market.
The IWM (Russell 2000) is up over 50% and is above its 200 day EMA indicating a bull market.
Today the transports moved through upside resistance as well. In addition, this average is up over 60% from its March lows.
As the charts above indicate all the major indexes are moving higher. Now -- past performance is not a guarantee of future results. However, these charts do indicate some important developments.
1.) Despite all the moaning from Wall Street about, well, everything, people are putting money in the markets again. This indicates that -- despite the complaining -- people think profits are coming.
2.) The stock market is a leading economic indicator. The markets moving higher indicates there is enough confidence in the future to put money into riskier ventures like stocks. This is a very positive development.
3.) The right wing blogs have since moved onto to other talking points because this one blew up in their face.
Now -- there are still plenty of problems. In short, we're nowhere near out of the woods. We're still looking at a consumer who is paying down debt and a business sector that has pulled back heavily from investment. That means growth will be sluggish for sometime. But that does not take away from the importance of this development. The risk appetite is returning which bodes well for the future.
So -- if you're from the right wing side of the blogsphere answer this question: why are the markets rallying right now?
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Can you say Goldman Sachs program trading. They run a high volume system behind the scenes.
my company is already hiring back and looking for expansion in the next year small gains thought they may be, i am happy to not worry about loosing my job due to bad projections.
our job board is adding jobs every few weeks. so I can feel the swing a bit, and that is good for a stimulus bill that is not even half way thru its two year plan
I'm sorry, but without the creation of new jobs there will be no recovery. Basing the notion of a recovery on the market moving upwards is little more than sitting at the roulette wheel and betting on red because it has come up five times in a row.
Here's my take. No business can be successful without customers; there has to be something to sell and there has to be someone to buy it. Otherwise in a short order there will be no business. Every time someone loses his/her job, our economy loses a consumer and we're still losing jobs at a 500K a month clip. That doesn’t even take the loss of hours (part time work) and benefits into account. But now, even worse, states are running out of money for unemployment benefits. How's that going to effect business? We're far away from a recovery; we aren't even close to stopping the damage.
Demand drives supply. Print some money and plug it into the bottom of our economy and keep doing it until jobs begin showing up again. Then we’ll be on our way to a recovery.
High stock prices do not say much for the U.S. economy getting back up to speed. I think the coming DEFLATIONARY SPIRAL, which is now predicted for Japan and Europe, is going to hurt companies pricing power and cause stock prices in the U.S. to decline. Look at the rise of bankruptcies and unemployement in the U.S., already.
So were are the corporate profits (except for the bailed out banks) that justify a run up on the stock market? If this so called recovery proves anything it will prove JMKs' theory that an economy can be running at full bore and still have very high unemployment.
Coincidence (Obama plus rally) does not imply causality. Never has, never will except in the minds of sloppy thinkers.
... if anything, it proves that people were afraid of Obammunism and nationalization, but now investors are rejoicing in the more corporatist and fascist bent of the current Administration. With Government guarantees of mandated health care coverage (meaning, buy insurance from our friends or you get penalized.
Although, the real story behind the boom is insider trading and new money printing. The stock market has been tracking the expansion and contraction of the money supply for about the past six months.
Seriousy, dude, don't you ever get tired of being wrong?
volker was asked as he left office "will interests go up or down?", he replied "they will go up and they will go down"....
when the center of the nation realizes that adults have the game board instead of the selfish sociopaths that inhabited bush-ville, they will regain some measure of confidence in the future. fear, uncertainty and doubt will give way to greed as people start believing in long term stability.
that is the nature of "the obama bounce". the markets are emotional in nature--the essence of FUD--and its opposite, hope!
d
The right wing isn't going to change their message. Their message is simple: the market goes down because of Obama; the market goes up in spite of Obama.
The cheerleaders on CNBC must be tying themselves in knots. On the one hand they pan everything Obama and on the other they must convince the sheep that prosperity is just around the corner. Trying to sell two diametrically opposed philosophies simultaneously must be stressful.
The S&P has a PE of 19. This is based on earnings that have beaten their low ball estimates and have actually fallen and on losses that are not as bad as estimated. Microsoft sales are down and it's leading the rally. If Wall Street was the emergency room then viewing an accident victim's severed arm twitching would lead to a diagnosis that there has been a complete recovery.
The hemorrhaging has stopped. The Treasury has been emptied into the vacuous vaults on Wall Street. Bush's efforts of wars, tax cuts and boondoggle spending failed despite a trillion dollar deficit. Obama is trying it using two trillion. The stimulus is tax cuts and boondoggle spending while the wars continue albeit on the back pages of the press.
I am leery of this rally. Companies can't cut their way to sustainable growth. The economy is still running on debt; the Government has simply supplanted the homedebtor. The real economic story is whether the economic engine will start before those who are propping up our delusional economic self aggrandizement lose the will to throw their monies into our economic black hole. If we can't burn other people's money we will get very cold.
Hi Ole, one of your fans here. I agree with everything you have said, but I am a classic Dow theorist. The confirmation of the Transports on Thursday has made me seriously doubt my common sense and yours.
I am going back to check the entire patter of the 1930's and see if the markets did the same things on a technical basis. I beleive we had the same "bull" flag pattern about 1 year into the decline. It was followed by a drop which is still too nauseating to dream it will happen again.
Either way, I am sticking with bonds for now.
I have 25% in traditional investments and they've done quite well recently. I'm not "all in" on one side or the other.
My retirement account just bounced back by over 15% in three months. Nice.
Mine is back up ~25% in one account, and >20% in the one I have set more conservatively. My "Fun Money' stock account is up over 50% since February though,...
But I have the stop losses set in that account for the (inevetible) crash we just might have before the end of the year,...
Whenever we have a Democrat for a president the right-wingers get their undies in a bunch and cry how the economy is going to shrivel. I heard this under Carter, Clinton and now Obama. Truth is, the economy only swan dived when GW Bush had his turn.
Wage stagnation for the segment of our society that is connected to financial markets solely by 401K accounts needs addressing in addition to a bolstered marketplace. A globalized marketplace has had little positive effect on the shrinking and stressed middle and working poor classes. What plans are in the works for, arguably, the very foundation of any societal economy?
Bush pulled the market up also and look what all that lead to.
So basically your question at the end has me scratching my head.
No markets went up much more under Clinton actually. they were fairly flat during Bush. What Stewart is saying is this is a predecessor to first, small business investment, then creating jobs which is generally the lagging indicator that we are out of a recession.
Bullet sales to tea baggers causing a spike in industrial production and thus consumer confidence is rising; I say buy Lead : sell Gold.
Bondad. Making a manipulated, casino pitched stock market a right wing, left wing discussion piece is a squandering of your keen intellect. In this profligate printing and borrowing and positing in the pockets of corrupt bankers, Wall Street is not a leading indicator of anything except speculation, insider trading and government money in sordid hands.
We are in a short-term bull phase of a long term bear market. The market might go up another thousand or two thousand points as the suckers, foreign money, small investors, hedge funds and so on jump in to grab some fast money. Sooner or later, the bubble will burst and Obama will be rightly of wrongly blamed. And the economy will have declined further as Obama Administration stays the despicable Bush economic course: printing, borrowing, spending on finance and rescuing bad loans.
If Obama was pursuing a rational economic policy, Wall Street would be in eclipse as manufacturing and human competence began to take its proper course in American governance.
The rise and fall of the stock market is an American issue, not Republican or Democratic. Both parties must come together in common cause to turn this country in a new direction before it implodes in ruination. Money of the casino must be spent on developing our people and country.
Keyword: IF.
Hale, thanks to your reports and blog I lost a minimal amount in the downturn and have made 18% in the last 7 months. It's amazing how well you can do when the reports you use to make decisions aren't biased.
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