The S&P trades at 750.78 right now. Less than a week ago the intraday low was 666.79. That is…. (zwei hin, vier im Sinn, fuenf hinter’m Ohrlaeppchen, drei zwischen den Zehen…) 12.5% in a week. The media is full of positive reports on how things may take off. I got this msg from our coverage at Merrill:
THE TONE AND DIRECTION OF THE MARKETS REMAIN LINKED TO THE INVESTMENT COMMUNITIES VIEW OF THE BANKS, AND FOR NOW NEWS STORIES OF GOOD FIRST QTR EARNINGS AND POTENTIAL ADJUSTMENTS TO THE MARK TO MARKET ACCOUNTING HAVE HELPED ALOT. WE'LL SEE!”
In my mind that pretty much hits the nail on the head, except for I don’t see this quite as positively. People are sick of the continued pain and want to believe in a rally. I think that there are still too many systemic risks. In my mind the recent rally is due to:
a) mark to market rumors--buy the rumor sell the fact
b) Citi (and by now I guess BoA and JPMorgan (?) headlines of profitable first quarter, which are likely misleading. Citigroup claiming that it is profitable (pre write-downs, mind you) does not make a summer. Will there really not be any more writedowns? Have accountants really priced in increasing mortgage delinquencies due to ever-rising unemployment? I have a hard time believing that.
c) oversold levels after a week of straight declines. 666 was really low after the mkt had just collapsed.
So while you might be able to make money if you’re good at timing the market (unlike me!) I don’t think this holds. Incidentally, gold tells the same story as it keeps rising after dips.
THE TONE AND DIRECTION OF THE MARKETS REMAIN LINKED TO THE INVESTMENT COMMUNITIES VIEW OF THE BANKS, AND FOR NOW NEWS STORIES OF GOOD FIRST QTR EARNINGS AND POTENTIAL ADJUSTMENTS TO THE MARK TO MARKET ACCOUNTING HAVE HELPED ALOT. WE'LL SEE!”
In my mind that pretty much hits the nail on the head, except for I don’t see this quite as positively. People are sick of the continued pain and want to believe in a rally. I think that there are still too many systemic risks. In my mind the recent rally is due to:
a) mark to market rumors--buy the rumor sell the fact
b) Citi (and by now I guess BoA and JPMorgan (?) headlines of profitable first quarter, which are likely misleading. Citigroup claiming that it is profitable (pre write-downs, mind you) does not make a summer. Will there really not be any more writedowns? Have accountants really priced in increasing mortgage delinquencies due to ever-rising unemployment? I have a hard time believing that.
c) oversold levels after a week of straight declines. 666 was really low after the mkt had just collapsed.
So while you might be able to make money if you’re good at timing the market (unlike me!) I don’t think this holds. Incidentally, gold tells the same story as it keeps rising after dips.
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