MONDAY’S SHOCK AND AWE
Great data here from Liz Ann Sonder’s at Schwab:
If news sources want to be the most accurate, they would express yesterday (Monday) in terms of its shock to the system, not its shock to whoever’s reading the comment. To figure out yesterday’s shock to the system, SentimenTrader.com used something called “Average True Range” (ATR), which is just a way to express how much the S&P has typically moved on a given day during a given time period.
The ATR of the S&P 500 over the past three months is 29 points. So, yesterday’s rally of 54 points is about 1.9 times ATR. In those terms, there have been 906 days that matched or exceeded yesterday’s “shock value.”
While it’s not uncommon to see rallies of yesterday’s shock value, it is rare to see them during a bear market after the market has already rallied more than 10%. SentimenTrader.com looked for those days and only a handful popped up. All of those days were all concentrated in late July 1932, marking the explosive end to the worst bear market in history, and again in April and June 1938 as that brutal bear market was ending.
The current two-week rally is the largest since 1938. There were two other distinct occurrences of two-week rallies comparable to the current one: July 1932 and April 1933. Both marked bear market bottoms.
Interesting data. I don’t like to put my weight behind a “handful” of data points, but it’s interesting nonetheless.
Been bearish since july 07 but getting a funny feeling we could go much higher than everyone expects here. Picked up some apa and apc today, charts are setting up nicely IMHO.
Interesting data. Thx!
Funny thing is…everyone is already expecting this thing to go higher…they are buying on the dips every chance they get….definitely window dressing for quarter end playing a big role in this run-up. I know things are NOT getting better in this economy even as the markets rally…my sisters company just laid off more people yesterday.
Certainly is a bullish feel in the market. I've been out since last week when I got my sell signal. I still think the risks are very high. Most concerning is the fact that the bond market hasn't confirmed the equity market rally and the fact that earnings are still deteriorating. I don't think the fundamentals have changed at all really. All that has changed is psychology and I prefer to use that as a contrary indicator.
We could easily continue much higher, but I don't feel confident risking money on the long side right now. Things appear to be too bright and rosy right now. That could change on a dime.
Too many doubters on this rally for it not to continue IMHO…many have been shorting into this rally only to run for cover the next day. I would argue the fundamentals have changed this administration is ready to inflate the hell out of anything that moves…will it work..probally not, but I think in nominal terms the market will continue to climb..it is shocking the Treasury auction was well received…I will sleep better at night in energy/material stocks at this point than dollars/fixed income. Nice to see the market rally w/o financials as well.
Yeah, it's not surprising to see the market move higher. We're still in no mans land until April rolls around. Then the real test will come.
I am no gold bug and I actually think gold makes a lot of sense as well at this point. Not only as an inflation hedge in the face of all this money printing, but as a hedge against stocks falling. Something to think about….
Seems like sentiment is more balanced right now but I have my friends (who lost big during the bear market and vowed not to go back in) re-entering the markets again full force now just to try to recoup some of their losses….I usually take this as a sign of a contrarian indicator because it was the same friends whom I warned that were buying stocks up while the smart money was selling….Firms like GS, UBS dont make money if there arent any suckers on the other side of the trade. Grant it that this rally may last and some suckers do get out before it reverses…but most dont. Like I said, this rally would give me more conviction if the economy is actually showing signs of improving…with this rally, people are expecting the economy to bottom later this year and start growing again…I think the chance of that happening is slim to none at best.