Bear Market Rally

Per our prior discussion, several people asked for samples of the cover your shorts, long trade commentary. Note: The emphasis was that this was just a short term trade, and that a lower low is eventually out there.

Starting next month, all of the RR&A stuff will end up on the Fusion site.

Here’s two recent comments:

BEAR MARKET RALLY
Tuesday, April 01, 2008 | 04:52 PM
http://bigpicture.typepad.com/comments/2008/04/bear-market-ral.html

Batten Down the Hatches!

Friday, February 29, 2008 | 03:48 PM
http://bigpicture.typepad.com/comments/2008/02/batten-down-the.html

Time for the Bounce
Wednesday, January 23, 2008 | 03:14 PM
http://bigpicture.typepad.com/comments/2008/01/time-for-the-bo.html

Note we discussed the January 23rd Time for the Bounce call both here and on CNBC.

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What's been said:

Discussions found on the web:
  1. Paul in NYC commented on Apr 16

    It seems there is nowhere else for people to put their money at the moment, especially since the allure of Gold has significantly lessened with its recent peak.
    I can see no other reason that the market hasn’t fallen further.

  2. Rally Monkey commented on Apr 16

    This is not a bear market rally. This is a broad base rally – new bull market rally.

    Today’s NYSE breadth is +2000 with buying interest when the TICK falls back to zero and limited pullbacks when the TICK hit +1000.

    Since 1999, there were 14 such occurrences and ALL of them were during the bull market. (all after 06/15/04, and none during 2000-2003 period)

    Sorry to tell you but you are wrong with your Bear Market Rally prediction. It is the bull market rally.

  3. mdcphilly commented on Apr 16

    Barry:

    I like your blog. I understand you think the market will go lower.

    I was wondering, however, if you could provide some insight into the effect that inflation is having on the market. If inflation is rapidly rising, say at 5% a year or more, doesn’t that imply that the market is essentially falling even it its rising nominally.

    Furthermore, given that adjusted for inflation the stock market has been essentially flat since 2001, I’m wondering whether the historical returns of approximately 10% annually that we’ve seen for the past 50+ years might not be in quite as dependable in the future as they’ve been.

    Thanks,
    Mike

  4. craig behnke commented on Apr 16

    patience.

    it takes time for recessions to erode corporate earnings, squeeze profit margins, and for analysts to reduce forward outlook enough and for most market players to throw in the towel.

    the financial bubble took years to build up, it likely won’t unwind in 6-9 months. i’m not saying we’re on the edge of disaster, but things probably won’t snap back quickly. consumers at 70% of the economy are in the weakest position to grow their expenditures in the last 25 yrs. are they going to take on more debt to continue spending more money than they make? probably not. Are they going to get real wage increases to outstrip inflation and continue spending more than they make? probably not.

    without that consumer growth engine, GDP is probably pretty low, corporate margins probably compress materially, S&P earnings probably fall then are probably low growth for a while, and some sectors of the economy are probably gone for a long time (financial firms’ earnings growth from collateralized debt product lines).

    that will be offset by some positives probably like stronger export growth but manufacturing at less than 20% of economy needs a huge increase to offset the losses.

    a muddle through economy and market seems likely.

  5. Paul in NYC commented on Apr 16

    IOW it’s neither a bull nor bear, but a “stale market”.

  6. xplore74 commented on Apr 16

    Does anyone read Clif Droke over on financialsense. I was curious if someone could repsond to his bullish arguments. Look at any measure you want the trend is clearly on the weakening side not strength for the economy and yes I understand the markets can precede upturns, but I think its too early. Anyway, here’s link

    http://www.financialsense.com/editorials/droke/2008/0416.html

    Obviously Barry I would mostly appreciate your views.

  7. Matt M. commented on Apr 16

    Uh-oh….all’s quiet in BarryLand. That can’t be good. Maybe the banks not needing the fed open window to exchange their garbage mortgage paper (auction was way underbid) meant something after all. We even lost all the anti-American posters today….hey at least the Bush bashers checked in earlier.

  8. Mr. Obvious commented on Apr 16

    Yeah, its a bull market rally. I mean, who doesn’t love $114 oil, $3.50 gas, and food increasing at 17% YOY.

    Jesus, look at earnings…JPM’s profit is cut in half, but they beat estimates so the market rallies. Same with Intel (how many times did they guide lower…3?) beating their estimates.

  9. Barry Ritholtz commented on Apr 16

    Not quiet, just busy.

    (Or do you think 5 posts by 2:30 is quiet?)

  10. Matt M. commented on Apr 16

    BR,

    I was referring to the comment posters not you.

  11. BG commented on Apr 16

    Just like I said earlier today:

    With the Dow up 200 points on the same day JPMorgan writes-off $5B, I say “Don’t worry, be happy!”

    Keep it going guys!! Obviously, you believe in your convictions, right?

    Just don’t look for me to bail you out. You bought’em, you own’em!!

    Posted by: BG | Apr 16, 2008 1:24:30 PM

  12. Carmen commented on Apr 16

    total volume today is not looking so hot. what’s up with this?

  13. Matt M. commented on Apr 16

    C’mon BG….lighten up a bit. There have been multiple sectors that have put in very nice movesover the past 4 weeks. Look for good risk/reward trades in strong RS sectors and don’t take your opinion so darn seriously.

  14. DL commented on Apr 16

    Total volume today is not looking so hot. What’s up with this?
    ……………

    To which I would add:

    Is the VIX getting a little low or what?

  15. Estragon commented on Apr 16

    Carmen,

    I’m wondering the same thing. It looks to me like it could be more short covering than accumulation.

  16. blin commented on Apr 16

    Still A bear. The S&P can rally another 5% and it would still be considered a bear market rally.

    But if anyone thinks we’re in a baby bull, by all means buy. I would recommend financials since they’ve been beat up so much. Just remember you’re the one trying to catch a falling guillotine not me.

  17. Paul commented on Apr 16

    Paul from NYC, I am paul visiting NYC – I think you must be 10 years old – We are in one of the biggest bear markets in the last 60 years. It is just coming on…obviously you have never traded a bear market. you should listen more and talk less!

    Paul – the real one!

  18. Paul in NYC commented on Apr 16

    Well, yes, adjusted for inflation the market has been a bit of a disaster the past 8 years, and I have 40 plus years of personal reference to go by thank you.
    Enjoy your visit and learn some manners.

  19. rickrude commented on Apr 16

    BS, this is a pure bullmarket rally in Oil, Gold,emerging markets,,, anything anti – US

  20. lauteus commented on Apr 16

    Incestuous greed for all parties involved… shorts hold for more gains and end up covering… longs buy dips to make that extra 0.5%… seems like no one wants to miss the train. small profit transactions, nimble and swift, that’s the only way to play this market while the bull and the bear fight for dominance. If you wait too long you might get gored or mauled

  21. tradahmike commented on Apr 16

    Barry:

    Thanks for the sample research. I have been trying to contact RR&A for the past 10 days,both by phone and email.

    Phone forwards to an IVR which then forwards to a human with no knowledge of RR&A.

    Emails and Helpdesk tickets, no response.

    Can you give me any updated contact info for RR&A? Have some prospective subscriber-type questions. Thanks

  22. wunsacon commented on Apr 16

    Matt M., thanks for the goading. FYI, everyone on this board is pro-American. Be we liberal or libertarian or non-wingnut Republican, what we’re “anti” is “anti-neocon” or “anti-Bush-and-his-supporters”. Are you a neocon, a Bush-supporter?

  23. Ross commented on Apr 16

    Love bear market rallies. I’m slightly preg………..I mean long some QLD. What’s really cool is the winter wheat is about 3 weeks from ripe. Wow, $550 and acre gross!

    You guys need to buy a freezer and load up on some cheap protein while it lasts.

  24. Winston Munn commented on Apr 16

    $81 billion paydown today on a CMB and another $14 billion tomorrow – one time infusions that tell the tale about the short term rally and the poorish volume.

  25. Eric Davis commented on Apr 16

    Inflation, and materials can keep quite a bid in the market.

    F-PE and increased input costs, should take us down…. But when?

    There are those talking about us being in a slow trade for some time, till stocks are priced for perfection + Then we should start melting back down.

    Or not.

  26. bk commented on Apr 16

    Right now the tanking dollar is helping large caps with strong export positions. Essentially the market is temporarily exchanging American consumers for foreign ones. However, all signs indicate a forthcoming global meltdown, and even our rapaciously consuming friends in the emerging markets are going to be squeezed until dry (inflation, rising fuel and food prices, worker and consumer unrest, etc.). 2008 probably won’t be SOO bad, but I don’t see anything positive for 2009 (inflation AND unemployment). The CDS mess is merely postponing all the write-downs, the monolines are not much stronger than a couple of months ago, and our fiscal policy is a NIGHTMARE. Enjoy the market for the present, it ain’t gonna last.

  27. Matt M. commented on Apr 17

    Wunsacom….

    I normally vote R. I am far from a wingnut or chickenhawk. Unfortunately, shallow minded folks automatically make assumptions that a R or Dem must be extreme…far left…far right. Reality is far from that notion. I think their are quite a few areas of policy that Bush fell down on, yet I understand that whether or not I agree with Bush has little to do with the greatness of America. I’m going to go out on a limb here and guess that you only see reality in your own opinion, and that carries over to quite a bit of difficulty trading. Just my guess, but I’ll bet I’m pretty close….although you’ll find a tough time admitting it….you know with the fixed,corrupt market and all.

  28. Grodge commented on Apr 17

    As “Bear market Rallies” go, how does this one match up? It seems pretty anemic.

    Still lots of cash on the sidelines, perhaps waiting for more bear capitulation?

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