Bottom Callers Run Rampant

Last week, I questioned the conventional wisdom which claimed that there was Not Enough Bullish Sentiment?

It seemed that there were plenty of Bulls who looked at the 15% pullback in the S&P500 as an ordinary dip-buying opportunity.

In a moderate recession, an 85 day, 15% drop would likely be insufficient to reflect the changes in both growth and earnings — much less a deeper, more protracted recession.

The counter-argument is that the Fed has flooded so much cash onto the system, the recession no longer would matters.

Looking from a sentiment perspective, its hard to say that the we’ve seen the sort of fear that typically accompanies a lasting market bottom. There’s still plenty of speculative juice around. Consider these headlines from over weekend:

• Barron’s: Are You Ready for Dow 20,000 (this year!)
• Vince Farrell on We’ve Seen Our Bottom
• Barron’s cover story: Hitting Bottom? Several Banks and Brokerages Are Ready to Pop Up for Air
• Jim Cramer on An End to the Bear Market? and why this is A Turning Point   
Insiders, at Least, See Reason to Smile 
• Just about anything at Forbes.

The closest thing to an admonition of caution was Barron’s Technical columnist, Michael Kahn, who called this The Market Bottom That Wasn’t.   

That doesn’t mean we can’t see a decent bounce here — there’s lots of liquidity, and as we saw last week, the market stopped going down on bad news. That’s usually good for a 5-10-15% counter trend rally. We saw that begin last week.

But Dow 20,000 this year?  I highly doubt it . . .



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  1. craig commented on Mar 24

    this is a nice bear rally, bear markets are prone to sharp clearing rallies. i don’t think the world is ending or dow goes to 10,000. but,…given the current macro-econ conditions in the US and how long the latest bubble lasted, i highly doubt we are done unwinding the bubble’s effects and that these are sustainable gains from which we move materially higher over the next 12-18 months. nice little rally tho. muddle through economy, sideways markets with a lot of ups and downs next 3-12 months seem likely.

  2. Smokefoot commented on Mar 24

    The Times article on insider buying raises a question that I haven’t seen addressed here – what do insiders see that we don’t see? Why is there strong insider buying at the same time that the CFO survey is so negative?

  3. Mikkel commented on Mar 24

    Barry you’ve hit on the reason I’m so critical of most people that talk about “historical” behavior when looking at some metric. I have found that they almost never correct for the macro trend.

    For instance a lot of people say this reminds them of 98, but if you look at the charts the 200 day MA never even got to the point of decline during the 98 panic.

    People base their behavior as if we are always in a bull market (or bear market once those are old) rather than doing proper time series analysis. And don’t even get me started on the difference in analyzing a cyclical bull/bear during a secular bull vs. a secular bear. There is good (albeit anecdotal at this point) evidence that we are in the middle of a secular bear market and will see anemic returns for at least another 8-10 years.

  4. TempusFugit commented on Mar 24

    The only one of these articles with any value is “Insiders, at Least, See Reason to Smile.” The rest are just the usual BS technical analysis, sorta like reading (and smelling) goat entrails…especially the Cramer stuff.

  5. Eric Davis commented on Mar 24

    15% is 1460
    10% 1397
    5% 1335

    but with a few dips and bumps could/should end next Monday.

    What I’m confused about…. is that they are trying to trade it like a “Crisis” Trade… where we end a… 9/11 or Gulf war, and we rally 1500 pts

    The Crisis trade was in August… and we had the “Denial rally” in October.

    We should be trading a Recession… Which tends to end when there are some signs of recovery… Not sure what those signs are.. but…

  6. Max commented on Mar 24

    DOW 20,000. Right. From some guy in Indiana I never heard of.

  7. Crim Jamer commented on Mar 24

    Carter Worth (Oppenheimer)…for what it’s worth, has been consistently saying this was no bottom also. I don’t know what he would say today, but…

  8. michael schumacher commented on Mar 24

    what can ANYONE say when the market is totally devoid of ANY reality.

    This is just so fucked it defies description…

    It just gives those hopelessly optimistic perma bulls fodder for another week/month.

    THE whole BSC thing is/was telegraphed from the get go. No wonder it’s SP NEVER touched the actual offer price…Fucking fix was in before it was even announced.


  9. DesiPanchi commented on Mar 24

    Well, there are dead cat bounces and then dead fat cat bounces. Does a dead fat cat bounce more? I doubt it, but I will enjoy it while it lasts…

    — r

  10. ciaociao commented on Mar 24

    Whenever MS starts dropping F bombs, you know the shorts are hurting.

  11. Mr. Market commented on Mar 24

    Insiders: “Herrrre sucker, sucker, sucker…herrrrre sucker, sucker….”

    Gotta have someone to sell to. It could be you!

    Don’t be a deleveraging enabler.

  12. Dee Leverage commented on Mar 24

    Insiders helped cause this whole credit mess…insiders have no clue what the average American is like…insiders are the last group I would follow now. I know a former Bear alum who paid 50 for Bear 2 weeks ago.

  13. Jay commented on Mar 24

    Was this bullish?

    “Insider Buying Set Records in August”

    “NEW YORK (AP) — Insiders purchased shares of their companies’ stock at a record pace in August, analysts said, as credit market deterioration threw stocks into a tailspin during the month.
    The trend of buying among insiders, who are typically long-term investors, was one of the few bullish signals last month, said, a Web site that tracks insider transactions.

    According to Thomson Financial, insiders drove buying volumes to their highest monthly levels since 1990, with $465.5 million in purchases.”

  14. Big E commented on Mar 24

    No post on the two money honies on Meet the Press yesterday?

    I actually gained some respect for Maria, but Erin the Pinhead just made herself look ridiculous. Can someone please tell her that they didn’t invite her on the show to read her notes to everyone?

  15. cathompson commented on Mar 24

    this move should be good for your inventory,but dont fall in love and forget to sell.

  16. michael schumacher commented on Mar 24

    nope not hurting at all…..just re-arranging deck chairs on the titanic is all.

    We ALL will be hurting because of the failed policies to inflate this all away while the top %1 doesn’t have to so much as bat an eye.

    That you can’t see that is what is wrong with all of this. But please go ahead and make it about the latest pump and dump scheme since we now have the Fed as an LLC to back stop every failed strategy.

    i am merely commenting on the state of what passes for financial “news”. Too bad you want to make it more than that.


  17. Dee Leverage commented on Mar 24

    It is also easy to see that this rally, like all others recently, is on pathetic volume…QQQQ not even at half 100 day MA volume.

  18. Crim Jamer commented on Mar 24

    Take billions from the Fed window, create the illusion of panic in the bill market, squeeze the shorts, lather, rinse, repeat.

  19. JustinTheSkeptic commented on Mar 24

    Insiders are buying, in an effort to show support for their stocks, because they realize if the truth gets out too quickly, this market plummits! Besides if your an insider and know that your going to be at the company for the next 10, 15, or 25 years, then buying now shouldn’t hurt you too bad, and help you a whole lot if things turn up intermediate, and you sell again. These jokers are kings of minipulation!

  20. Philippe commented on Mar 24

    Sorry do not think that the Pandora box is closed on the financial system as it is just sitting on dynamite, the last flux was a regurgitation, the CD’s markets and the associated derivatives just need a small tailspin to finish the whole sector.
    See how much derivatives JP Morgan add throughout its acquisition of Bear and Stern (One may understand why none of the interested party should let the staff go right now) in its already loaded contra accounts it will add 14 Trillions USD of Bear Stern derivatives, and may be this study will complete the ambiguity of CD’s versus derivatives.
    May be someone from CB’s or BIS is on the top of the events, may be Bank’s CEO’s have a full understanding of their books in derivatives, may be they all offset each other through reliable counter parties or may be this time again the proverbial musical chairs are getting scarcer?
    In any case whoever will tell that he has confidence in the fiancial sector must be listened to on theses topics.

  21. Bob A commented on Mar 24

    It’s not surprising that all the money that came out of commodities early last week went somewhere, and it look’s like it went into stocks.

    But what I don’t see anybody talking about is… who the hell were the sellers of all those commodities? GLD UNG OIL DBA DBC etc??

  22. MarkTX commented on Mar 24

    Add in End Of Qtr. for those tough to get out stains…

  23. michael schumacher commented on Mar 24

    well…..”shitty group” did tell a group of analysts (non-public information delivered to a group of people is just a bit illegal but I digress) that they were to have “a few hundred billion in asset sales in the coming weeks”.

    And as previously stated……why sell when you can go get free money from the FED (with a non-recourse backstop NO LESS) and toss it at that “dip”….


  24. Ben commented on Mar 24

    Look, I really don’t see any buying today, people must be very happy they can have a very decent lunch and forgot to show us some volume on today’s trading, I think we need more good news to stimulus more short-covering rally! Dennis, tell us what to buy, show us the list!

  25. AGG commented on Mar 24

    The insiders are really smiling because the fed is lending your money to broker banks to pump up stock prices so the insiders can get out before the stocks tank.
    I’m smiling because the money the insiders make won’t be worth a plug nickel.

  26. Estragon commented on Mar 24


    Consider the following time series:
    – Market falls ~50% over a roughly 3 year period.
    – Market recovers to roughly the old peak over the following 3 years or so as the fed adds liquidity.
    – Market pulls back ~15% over a six month period, then chops around a narrow range for several months as a mild recession takes hold.

    Does this sound familiar? The period in question is 1919-1925.

    So now what?

    The grand-daddy of the Greenspan put was born in the early 1920’s, and in the following years was nurtured to maturity. For example, in the March 1927 words of Treasury Sec. Mellon; “There is an abundant supply of easy money which should take care of any contingencies that might arise”. Not much different than what Bernanke or Paulson have said recently.

    Interestingly, the late 1920’s saw a nearly 5-fold rise in the dow but little CPI change.


  27. Crim Jamer commented on Mar 24

    Dang Estragon, you mean I have to wait another 4 years for the crash?!?! I am not that patient.

  28. Mikkel commented on Mar 24

    Estragon: are you predicting the market will triple in the next three years?

  29. michael schumacher commented on Mar 24


    Not even going to point out the large problems with trying to compare era’s.

    You know, as well as I do, how different it is now and that using CPI data (that gets buried when it’s not happy) to compare these two period’s of time is ridiculous.

    As the market gets backstopped by the Fed via the creation of an LLC (for shit’s sake!!)how does that factor into the data points????

    Ah.. it don’t…


  30. Dee Leverage commented on Mar 24

    Stabilized housing is the last thing we need right now…let the mofo crash so we can start a real recovery. It will be less painful to rip the bandaid off all at once.

  31. blin commented on Mar 24

    Expect a 10 -15 % rally in all major indexes off the current bottom…my target stands until further notice.

    stay tuned…

  32. Eric Davis commented on Mar 24

    I’d hate to be living in denial… But this is just the kind of great Rally, to pull some people in, to create enough panic to take us to Classic 20%+ Bear Correction in all indexes… We can’t have the Supercycle without the trade… and to be honest.. Too many people were bearish….They had/have to be shaken out.

    and a Denial “mild/moderate recession bounce.” could be anticipated(aparently not by me)

    The Crowded trade is always wrong– near term.

    Go!! Team!! Keep your Chins up!!

  33. brian commented on Mar 24

    Certainly not the bottom. The peak of the ARM resets is this month and next month is the second largest peak. That means six months from now the NODs will be flying. There’s still another $700 billion in crappy paper to writeoff and a rise in unemployment.

  34. Estragon commented on Mar 24


    Obviously there are differences. Huge differences. That said, there are similarities too, the Dow pattern from 1919-1925ish being one of them.


    I’m predicting nothing. Just sayin.

  35. km4 commented on Mar 24

    Record high food stamp use in Ohio with 1.1m Ohioans are getting food stamps or about 10% of the state’s population.

    but no worries for the upper 1% of America because the Fed bailed out Wall St., the stock market is up, and JPM has increased Bear Stearns purchase price.

  36. michael schumacher commented on Mar 24

    I also could take two random points in time and see whatever it is that I wanted to see as well.

    I see what you are trying to show……..just say it.

    Say what you mean…the world does not need another Jim Cramer taking both angles and trumping whichever one comes to fruition…..we’ve got plenty of that already.


  37. cinefoz commented on Mar 24

    Maybe you all should try a little self flagellation with a braided rope of rusty wire. It might make you feel a little better and provide needed pain and misery for a little while. It’s like some brains here work in reverse. My good is your evil. Pleasure is pain. How about a nice forlorn wail, followed by some Tourette Syndrome uncontrollable cuss words? Goldilocks still loves you.

    Nyuk Nyuk Nyuk.

  38. Eric Davis commented on Mar 24

    I think he just sees something interesting/possible. In Reality, life is filled with more possibilities than probabilities. IMHO

  39. Bucket commented on Mar 24

    I think this go around, its important to plot the sp500 price vs. the basket of currencies in which it recives revenue. More so than before the SP500 recieves a large part of its revenue in currencies other than dollars, if it was at most about 19% of its 1570 peak dollar wise, it is acually has been more like 30% (or more) off the peak relative to SP500 revenue weighed currency basket. Unfortunately i dont have the actual nummbers this, would be an interesting metric to consider.

    Certainly there’s still housing ARMageddon to deal with, and overleveraged consumers, but on the whole its important to remember the world/financial systems are always screwed up, its just a matter of more or less…. Europe is aging, and also has a housing bubble, and super high taxes. china has a financial system which makes our bubble look like child’s play (5% interest, 7% inflation!)… so on the whole the US isnt looking all that bad….

  40. Matt M. commented on Mar 24

    Since there are no sure things in the markets, I will go out on a limb with my sure thing….. the world is full of broke bottom callers and of cynical observers who never see a bottom. They are one in the same….just on opposite sides off the trade.

  41. Mikkel commented on Mar 24

    blin’s call brings it near the 200 day sma so it’s definitely possible to have that happen even within the context of the larger downtrend. I think there is a good chance of it happening if there aren’t any further shocks…I happen to think the chance of further shocks before it gets there is very high though.

  42. michael schumacher commented on Mar 24

    It takes a special skill to ignore reality and fundamentals to just buy, buy, buy simply because someone said so.

    Good luck with that…..


    I have never called for the “end of the world” as I would dearly love to be as bullish as some here. I happen to embrace reality and because of that I am instantly a perma bear.

    When you connect the dots and STILL have a rosey outlook regardless of the fundamental picture painted for you….well that takes skill…..and not one that requires much thought…


  43. The Investment Banker commented on Mar 24

    What you are now seeing in markets the globe over is an orderly re-leveraging due to the sound fiscal and monetary policies of the US Federal Reserve.

    The systemic failure of so many leveraged bets on esoteric things like interest rate swaps and collateralized debt obligations would have crippled the financial system–the source of fully 40% of the S & P’s profits over the last two years.

    You see, the financial system exists to get capital where it is most needed–like say to that granite countertop in your kitchen, that through leverage and forex manipulations, was paid for by the sweat of a Chinese peasant’s brow.

    We investment bankers deserve a goodly portion of that re-directed money flow, as it is our efforts that identified those opportunities and quantified them for our investors (we even have a name for the people that do that sort of thing–“quants”–isn’t that cute?).

    If one of us were to fail, because through the magic of leverage, where one dollar of capital yields many more dollars to invest, we are all so interconnected that one failure would and the river might dry up. Then there would no longer be any way to manipulate currency exchange rates, or bet against the short vs. long-term spreads of bonds, or buy that IPO our analysts have been quietly shilling for for months. Translated for the little people–it might mean that you would have to save some money first before buying that McMansion in the suburbs.

    A darkness would descend on the land. It is not exactly clear how bad things would get, but it is very well possible that folks would have to return to the old ways of living when creating value meant creating real things that were useful to other humans. Investment banks might be forced to turn in their licenses to gamble and simply go back to selling and underwriting bonds and stocks for the real economy, where real things are created.

    Some of the quants might get laid off. Salaries would plummet to reflect the real value of aiding along the flow of capital, which needs little help in this age of free information flow, and not the imaginary value of leveraging the farm based on models that are rarely relevant past the moment they are created, even if occasionally they hit big.

    But, thankfully, we have Uncle Ben. He’s so foolishly convinced of our indispensibility to the real economy that he’ll do anything, including taking our liabilities but not our equity, to bail out our bad bets.

    So overall, life is good. We can keep betting the farm, w/ Uncle Ben behind us. And it won’t be long ’til the little people will be able again to afford that McMansion in the suburb, taking advantage of our expert use of leverage to create some of their own. Ahh, it’s good to be us….

  44. Chicago Finance commented on Mar 24

    Bloggers think the bottom has been reached. The Ticker Sense “Blogger Market Sentiment Poll” now reads 50% Bullish, 25% Neutral and only 25% Bearish. It has been the most reliable contrary sentiment indicator (at least since Barry stopped voting in it) with only a slight lag.

  45. craig commented on Mar 24

    blin. i’m with you on the 10-15% rally estimate and i wouldn’t be surprised if it was even a bit more as we go into quarter end. will I have the chutzpah to begin to add some shorts after a 10% rally and incrementally add to them if mkts continue to rise 15%….20%? not sure but if I’m confident in my outlook I’d want to profit from it.

    given the current set of econ conditions such as consumer very weak and prob gets weaker next 2-4 qtrs, record high corp profit margins that very likely compress next 1-2 yrs, rich mkt valuation relative to historic mean, mkt that gyrates +/- 2-3% per day (way more than historic usual), housing mkt that prob doesn’t recover until 2009. etc. if you were to observe general mkt returns over the next 12 months when we have had similar econ/mkt conditions, I’d say the returns have historically been very low relative to long-term mkt returns.

    i borke my crystal ball a few yrs ago and I can’t see the future anymore…..damn!

  46. Mikkel commented on Mar 24

    Oh yeah I have some thoughts on what the extreme volatility has a good chance of doing (I read that it’s the most volatile since the mid-30s).

    The way I see it, both the bears and the bulls are getting torn up and hard. Even people that make the right call have to be prepared to act at any moment or lose it. It seems like there is a good chance that tons of people are going to get psychologically worn down with all these massive moves and at some point will just stop trading.

    If that happens volume will start to dry up and the market will get even more volatile. This is why I think that there is a growing chance of a huge crash — when both the short sellers and bottom callers have given up — and then things will return to more normal situations after that flush out.

    This says the most since 38

    and while I was thinking this before I went to look at the chart, I’m thinking it’ll look like the week of march 21st and march 28th where it was down over 20% in less than 20 weeks when it happens. Obviously there were huge geopolitical events in that year, but I’m just throwing it out there. The irony is that if my guess is right, very few people will be involved either way

  47. Fred commented on Mar 24

    “nope not hurting at all…..just re-arranging deck chairs on the titanic is all.”

    that’s quite the prediction. if it’s a Titanic scenario, you simply buy land in ID and build your compound next to the next armageddon billionaire. truth is extreme calls one way or the other add zero value. there is much more downside on the way, BUT it’s just not going to be US-centered. it’s going to be political instability in Asia, namely China. the post-Olympic, spiraling food and fuel inflation will drive a political wedge between China’s disparate cultures. talk about a two front war: ideological to the south and islamic extremists to the north west. the full faith and credit of the US govt may be poo-pooed in your comfy armchair economist chair (or are you Canadian?), but around the globe, the USD and US assets are the ultimate safe haven investments….

  48. craig commented on Mar 24

    michael schumacher? the race car driver??? please send me an autograph, I have relatives in Germany that would pay me for it. even if you aren’t the famous driver and your autograph is worthless, i have learned from wall st. wizards I can take something that is worthless and create value (for me, not you). I will slice the worthless autograph into tranches of valuable letters and sell them off for a tidy profit. sweet.

  49. km4 commented on Mar 24

    > What you are now seeing in markets the globe over is an orderly re-leveraging due to the sound fiscal and monetary policies of the US Federal Reserve…Ahh, it’s good to be us….

    Investment Banker ahh yes because after a bit of pruning its time again to prime the pump of the derivatives ‘ticking bomb’ because $500 trillion is still not enough for the Wall St bloodsuckers.

  50. michael schumacher commented on Mar 24


    not a prediction…. it is where most fundamentals point……..or please post or provide something that points in a different direction???

    and the daily print doesn’t count since this could easily be down by the same amount so we’ll just take that out of the equation for both of us.


  51. AGG commented on Mar 24

    We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world – no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.

    Woodrow Wilson, President of the United States 1913-1921

    In other words, the big boys fight dirty.
    They are falling now and they want to take the whole country down with them rather than accept an egalitarian financial playng field.

  52. Goethe commented on Mar 24

    Perhaps this bounce is due to the pre-holiday effect (google it) perhaps not. Ultimately time will tell

  53. L’Emmerdeur commented on Mar 24

    Dow 20,000 is possible if EUR/USD hits 8.0000 and USD/JPY hits 15.

    And when fed bailouts cease to be sterilized, that’s exactly what could happen.

  54. Andy Tabbo commented on Mar 24

    the s&p has put in a head and shoulder bottoming pattern on the shorter term charts that targets 1430 area. the 1454 is the 61.8 retrace of the entire down move. This market will trade to 1430-1454 zone which will be a major sell opportunity.

    Also, the 20 mo. moving average (for the simpleton technicians) comes in around 1430 for resistance…..

    Good luck. Don’t fight the bounce…..and don’t believe in it either.


  55. John commented on Mar 24

    “NO post on the two money honies on Meet the Press yesterday?

    “I actually gained some respect for Maria, but Erin the Pinhead just made herself look ridiculous.” —Big E.

    I saw it. I think it begs the question as to why a once reputable show books these two clowns to comment on the credit crises/recession and outlook for the economy. Maybe Russert’s hurting for ratings…

    I don’t have respect for either of them, especially after Baritromo blabbered (on air during the trading session) about a conversation she had with Bernanke at a White House Correspondents Association annual dinner and his stance on rate cuts back in May of ’06. Stocks tanked late that day immediately after her little Blurb and Baritromo looked around with a WTF look on her face.

    Now if they would both take their clothes off and run around the set Bare-Assed-Nekkid (so we could all see some Boobs Flopping about) I would certainly have ‘More Respect’ for their show and would watch, Intently, and listen to every word with the volume cranked up (instead of Muted)…

  56. dave54 commented on Mar 24

    MY GUESS: Today was the end of the ~26 year bull-market in bonds. Next stop…
    10 year U.S. Treasury Note yeild 5.25% and 30 year U.S. Treasury Bond yeild: 6.25%

  57. dave54 commented on Mar 24

    HISTORIC REVERSAL: Today was the end of a ~26 year bull-market in bonds? Next stop…10 year U.S. Treasury Note yield 5.25% and 30 year U.S. Treasury Bond yield: 6.25%?

  58. dave54 commented on Mar 24

    CORRECTION:Next stop…10 year U.S. Treasury Note yield 5.75% and 30 year U.S. Treasury Bond yield: 6.25%?

  59. me commented on Mar 24

    “who are typically long-term investors”

    Look at IBM and all the zero cost options and I don’t see many “long term investors” among the IBM management.

    Insiders have become a pretty worthless indicator. These are the same guys that can’t figure out what to invest in so they buy back $Billions of their own stock.

  60. Aurora Borealis commented on Mar 24

    I am not flexible enough to see my bottom. Hats off to Mr. Farrell.

  61. Todd commented on Mar 24

    I’m racking my brain to remember the last time Vince Farrell wasn’t calling this a buying opportunity. Seems he’s been trotted out so many times in the past few months and parroted the same stance. Why should I believe him this time? Beware of permabulls.

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