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6 Theories On Why the Stock Market Has Rallied
There are at least 6 theories about why the stock market has rallied some 70% off its lows a year ago, even though nothing has been done to actually address the root causes of the financial crisis.
What The Dumb Money Believes
The dumb money believes what CNBC and their trusty stock churner ...
er, broker ... says: that the government has fixed the economy but it
just has to "kick in" (and that unemployment is just a lagging
indicator, nothing important. See this, this, this and this).
Therefore,
these folks believe that stocks are hugely undervalued, and that if
they buy while most people are still afraid, they'll make a killing
when the market goes to the moon.
Temporary Juice
Others believe that it is the
quantitative easing, low rates, bank bailouts, stimulus spending, and
other portions of the "wall of money" which the feds have thrown at the
economy are creating a temporary pump to the stock market.
But they think that - when the spigot is turned off - the market will tank.
The Situation is Inflation
Others believe that - regardless of continued loose monetary and fiscal
policy or real stock valuations, we're in for some serious inflation.
Stocks tend to preform well during inflationary periods.
For more on inflation versus deflation, see this.
Machines Run Amok
Tyler Durden
explains that all of the stock market gains have occurred after hours
when mystery buyers purchase stock futures in low volume environments
(and see this).
Vincent Deluard - a strategist for TrimTabs Investment Research (25% of the top 50 hedge funds in the world use TrimTabs' research for market timing) - said last month:
We've never seen this before – such a huge rally, and the little guy is out.
Some argue that it is high-frequency trading or momentum-chasing
trading algorithms doing the buying, and that the market will tank when
they change their game.
Fed Futures
Others argue that the government is itself buying stock futures.
Some believe that the Feds aren't buying, but that they have intentionally showered the big banks with money, and encouraged the banks to buy. In other words, they argue that the Feds are indirectly promoting a stock market rally.
Fraud Central
Karl Denninger believes that the market has rallied due to the systemic, fraudulent overvaluation of assets.
As Denninger wrote yesterday:
[A reader wrote] The FDIC to ask about [allegations of fraudulent valuations]. This was their response:
That’s the value the bank had them on their books on their year-end financials, but the true value is much less.
It is similar to someone in Las Vegas saying that their house is worth
$300,000 because that’s what they paid for it three years ago, but the
reality is, if they had to sell it in today’s market, they’d only get
$250,000 for it. The FDIC has to sell assets in today’s market...Or tomorrow's market.
The simple fact of the matter is that there it is, right in front of you.
A raw admission that the banks are carrying these loans at dramatically above their actual value.
Yes, this means that essentially all balance sheets must now be considered fraudulent, and thus the valuations assigned by the market to them are also fraudulent.
Extending
this to the stock market as a whole you now have a market that is
intentionally overvalued as a direct and proximate consequence of
fraud, permitted and endorsed by the government, of somewhere between
25-40%.
Now you know why the market rallied off the SPX 666 lows to where it is now. 1139 (where we are now) * .60 (a 40% haircut) = 683.40, or awfully close to that 666 bottom.
Of
course this "valuation" expressed in the market can only be maintained
for as long as the fraud is. If the ability to maintain that fraud is
lost for any reason then values will instantly collapse back to reflect
reality.
Note: Obviously, I believe this is a bear market rally which will eventually fizzle out.
If the bulls are instead right, then that will make me the dumb money.
(Look at the guy on the right, as well).
But I think it much more likely that the rally will lose all steam in the not-too-distant future.
Leave a comment about why you think the stock market has rallied, and how long you think the rally will continue.
The most important reason stocks have rallied is because of a 0% interest rate policy....
Where would the market be if interest rates were 0% ?
Where would the market be if interest rates were 15% ?
...........................
A move from $10 to $10.25 represents two years of interest...
So...if one is armed with Ivy League degrees and all the family/contacts in the world of finance....One SHOULD have the capablility to enact one of these events ....no ?
Come on....$10 to $10.25....This is nothing....but something....
You know all this conspiracy stuff is interesting but the fact of the matter is the bulls see some signs of tea leaf growth job wise that on the surface may bear fruit. To me that is simply why mkt is going up...no doubt I agree mkt has gotten help by the invisible hand. But I stand by my believe that these meager signs are only a function of massive trillion dollar stimulus actions that will peak this quarter. Thereafter growth will again normalize to sub 2% maybe 1% and no jobs will get created in 2H and in 2011 look out below.
Manipulation by the Vampire Squids (yes, there are more)--
I believe the stock market bottomed a year ago yesterday, and has been steadily walked up by market participants at the behest of the US Government (think Goldman Sachs or JP Morgan or even some account at the FED or Treasury), it doesn't matter.
The fact that once the market fell, and stopped falling, outfits like Goldman were able to mint billions of dollars per quarter tells you not that they have the best computer programs in the world, or the smartest most logical or intuitive traders, but rather that they took out positions that they knew would be profitable. In short, they knew as did others that the market would be higher tomorrow than it was today.
How did they know? Because they were part of a program to walk the stock market back up! It's just common sense. With banks collapsing under the weight of bad debt, much of which is bad mortgage debt, and consumer's wealth taking the triple hit of unemployment, falling stock market valuations, and falling housing prices, the easiest and quickest asset to "fix" was stock market valuations.
One year later the game goes on, and I suspect it will go on for some time. At this point returns will be much more muted, but downside is limited because as much stock is sold by investors or speculators, people with infinitely deeper pockets will be there to buy it. That is why the stock market refuses to go down in spite of heavy volume sell offs and light volume rallies. The market has been and continues to be "walked up" and kept up.
It's nothing new in Wall Street history, it's just a bit much to get one's mind around in that all stock markets world wide have nearly identical charts for the past year, with nearly identical returns off the bottom. Commodities too. Welcome to the world of the controlled market where everyone who invests makes money. The world of guaranteed outcomes. A world without risk.
Based on my previous post what are some opinions of what we should be watching as a foreshadow of a major market sell-off ... a prior assumption that fundamentals point down
Dollar, Bonds, Volume, technicals, black swan, gray swan (Iran, No. Korea, Israel), sovereigns, municipals, swaps , etc.
or do I just have to wait until mid November?
Thanks for your insights.
Over the past 5 years the market has become so speculative and so closely correlated to the indexes that manipulation has become increasing easy. Pump the indexes and everything else follows like sheep.
Speculation overlooks fundamentals and is fueled by greed and fear so propaganda (GS, US Gov, CNBC, your broker, etc.) pushes the speculator's fear of 'missing out' and all the manipulators have to do is bid up the indexes (SPY by day and ES by night) and then only at strategic points. Low volume insures a 'low cost' pump, so it's affordable. Who's going to sell? A thousand guys on their computers sitting around saying 'this can't be happening! I'm selling 5 now' ... No, they cannot overcome a concerted and well orchestrated push north. But alas, it can only go on for a season. There are probably too many people who know about this for it to go on indefinitely.
I have followed ES for ten years now and have seen when a major push occurs (5 minutes), it takes a long time for the market to subside (20-40 minutes) and if another push comes in it is another ratchet up ... every small decline is followed by a pump. This happened 2003-2007 with regularity ... but ... it was never supported by such huge bid blocks that we are seeing today at night. TD's analysis of the differential profit of night vs daytime is right on.
But having figured all this out does nothing for us if we can't find clues for when it ends.
This is mashup musical chairs and we may all die before the music stops.
if you don't believe it's the algo's zero hedge has publised data that shows JPM trading 90% of the total volume. it's a joke
don't forget the boys kow technical analysis. so, chinese characters works on commodities, but not on the NYSE. they will drive things up to get a fake buy signal then sell underneath. we are at a double top, so they are going to make sure we close above the other top to give a buy signal. the head and shoulders didn't happen, and I did a good bit of reasearch this weeking regarding it. we have had classic patters that don't appear.
I find dba trades without much manipulation. the pattern is to keep the market level, or not drop too much when the dollar rises then get the bum up when it falls again. *see december before the christmas rally. the market will go up until the masses invest. they knw the money flows and that people will get greedy. don't forget the fed isn't taking away any free money and goldman now has unlimited cheap money to play.
It's disgusting.
It's the algo's I could show you the charts I draw. you wouldn't believe it, but really spy trades only on algos. overall I can tell you the top within a few cents. I look at about 116 on spy. I used to not believe this, but it happens way too often. since they have dark pools and the masses aren't trading the situation is ideal for manipulation. they all figure you the chart, and there it goes. Commodities are much easier to trade, and treasuries are much easier to trade. they cant control those markets yet. commodities being international.
this whole run up lately is a buch of crock. the dollar hasn't fallen. so it's borrowed money from the fed generating the buying ability
that was awesome possum.
A thought from Dr Gloom, Doom and Shroom. I heard Marc Faber say the DOW could go to 20,000. But if that did happen, gold would be at 3,000. Meaning that if all the QE overcame deflation, the funny money would find its way into equities, as an inflation hedge. Gold would also benefit but even more than equities.
In my reading of the Von Mises site, i found a link describing Weimar inflation in detail. 100 pages worth! Equities went blazing upwards and traders made a killing. The public that had a stake to play with were also doing well trading too. As I recall, near the end, the corps that had too much debt went bust. So those shares went to zero. The corps that were conservative bought the bankrupt assets of their gambling competitors for "pennies on the dollar." Then they made warbucks from Hitler. But the war scenario comes after the inflation scenario of 2012-2016. [war in 2020?]
So the insolvent Fedsters have nothin to lose. They will keep pumping up the Dow for the sake of drugging the potential pitchforkers.
After such a massacre, bouncing with a high % is not as hard to accomplish. We are still well below the numbers of two years ago though.
Remember I said back in November the U.S. dollar will rally relative to the Euro? It turns out it did! Meanwhile the market yoyo continues. Some of the ETFs are up double digits in just the last couple of weeks. Therefore, it is still the case that market timing is the only way to make money in this market.
time123
Called the bottom in March 2009: http://invetrics.com/?p=973
First, I would like to say how much I enjoy your posts, and to thank you for them.Now, on to the question.I think the stock market is so high because of magic.I am talking about the kind that experts at sleight of hand or good stage magicians practice.In this case, it is used to defraud and control the public.For some insane reason, typical Americans think that high stock prices are good and also equal a good economy.Unfortunately, the economy currently sucks out loud.People are losing their jobs, homes and forced onto the streets.If only a fraction of them really ran amok, the entire house of cards would come crashing down.The people in control are desperate to continue the illusion that things will get better and that everything will be fine.
At precisely the time in our nations history that we need good leadership, at that crucial moment when all hangs in the balance, we get illusions instead of vision, venal self serving frauds instead of public servants, craven fawning enablers instead of reformist enforcement.
So they lie.And they manipulate.And they steal.In their insanity, they do not perceive the doom that awaits them, they are certain that they will escape it and that they are untouchable.Certainly nothing in recent time would disabuse them of this notion...they are the rulers...and not subject to the laws their lobbyists have twisted out of any semblance of justice or prudence.
In other words, Mr President, There is absolutely no connection between fundamentals or reality with current equity valuations.It is a magic show, a lie, a false reality.I agree with Tylers view of the low volume ramp as one mechanism.Doubtless there are many other ways they exert their control over the prices.
The disconnect now is so obvious I wonder how much longer they can keep it up.
But when they FAIL, it should be obvious....even to the most dulled of sense.
EURO daily signals suggest a big move soon.
http://www.zerohedge.com/forum/market-outlook-0
STEALTHCARE 2010 - coming soon to a hospital near u
Checkout newsfrom1930.blogspot.com. It`s like cnbc of the past.
Human 'de-evolution' is producing shorter and shorter attention spans and shorter and shorter memory capacity. Simple.
The Plunge Protection Team, cooked numbers (GDPs, "sentiment", CPI, inflation, unemployment, etc), oligarchs who had pulled out at DJ 14,000 and then reinvested at S&P 666, and inflation up until now. Then next month the Hollywood Futures index pumps fresh cash into the market. More inflation. China unpegs. More inflation. Stocks go to 15,000 by next March '11, and Gold at $2200 an O Z. The Doelarr is at DXY 66. Then after a nice run through '10 and into '11 for the CAD, AUD, NZD, those countries tank on housing bubbles, and their currentseas begin to devalue. Stocks push higher still. Dow Jones at 20,000 by Dec '11. That is when it all ends. I can only see so far out, but once people get scared, which should happen about then, the market could "crash" (what is stock if you get paid in worthless FIAT?). Worthless doelarrs are revalued by a new global currentsea held by the IMF and World Bank; let us call it the "Phoenix". The banks issue the currentsea based on the Central Bank's gold holdings. People might be stupid enough to keep accepting JPM food stamps and keep going along for the ride the whole time. Time will tell.
Bob marley "time will tell":http://www.youtube.com/watch?v=_7kSjZ9LoIs
the whole thing is a fraud
price is determined by a controlling computer
the bid is funded by the fed
the movements are engineered to maximize profits for the GS/JPM/Int'l banker gang at the expense of "the herd", and to manipulate herd mentality
period
investors have nothing to do with price except to the extent at which they can most effectively be suckered to exchange their cash for bubble baubles
Look the stock market tank and there was a bank run to trigger it right ahead of the Presidential election. We have massive pribery going on for health care with powers believing the ends justify the means and you think this market rally is coincidential with the desperation for some to show job growth ahead of the next election?
I vote temporary juice. Go to the Dallas Fed site and look at M1 versus SP forvthe last 30 years. Look at it forvthe last month. Notice anything ?. The M1 is now a leading indicator. Ben cut the supply and the market corrected. Got his job renewed, turned on the spigots parabolically... Now look at SP ... One big fucking Fed led ponzi scheme boys and girls. Too bad you will not find out that M1 has stopped growing before PBD do...
AIG and C up today ??. Are you fucking kidding me ?. They both should be pk sheets..
Spreading the disease... No one wants to see...
Nikki .... Safely north of Detroit..
Propaganda
This campaign has been far too consistent and calculated to brand it with the traditional label, “spin”. This manipulation of public perception can only be called propaganda. Only when we, the public, are able to call the underlying realities by their proper names—extortion, capture, looting, propaganda—can we begin to root them out." Yves Smith, ECONned
http://jessescrossroadscafe.blogspot.com
Just remember, those EPS that the S&P 500 is expected to and has pulled since April 2009 include financials marked-to-fantasy.
So saying we'll get $78-80/share this year assumes that mark-to-fantasy will continue.
Barney Frank's request for banks to write down 2nd liens is not going to help mark-to-fantasy or overall EPS.
Not to mention there was a lot of "profit" from the one-time tax lookback change. Almost the entire homebuilder segment earned a "profit" from that one-time tax benefit.
Of course, all their earnings were trumpeted in the MSM including the one-time benefit. If it had been a one-time writeoff, you can be sure it would be ignored.
When a market goes up on lame volume for as long as it has, you have to ask who is the "buyer" ? In all my years, bull markets are up on big volume, down on small volume...this has been anything but that......When the selling starts in earnest, who will buy then? There is just too much bullshit going on at the FED, and with the FASB rule change last year to "fabricate earnings" for the banks, you know that valuations are bullshit.
A "No Confidence" market is just that.
This market took off when the FASB was forced by congress to waive mark to market valuations, interest rates when to zero, and QE went to infinity. Until three factors change, EPS estimates will continue to be increased by analysts and the market will move to higher levels. The underlying factors causing the financial crisis have not been resolved, only hidden. My guess is that 2011 will be hell.
George, I always admire your posts. This is a tidy collection of the "conventional wisdom" in the bear market universe.
But to answer your question: I DON'T KNOW. I could be some or any of the things you've cited, or perhaps it's something else that hasn't been identified. There is no transparency, no cause and effect, no relationship to core fundamentals. This is a much different market than I feel comfortable "investing" in. Trades lasting more than a few hours bring substantial risk, and I don't want to work so hard to scalp basis points. So I wait confident that we are not on a sustainable trajectory.
I expect Joe and Jane Sixpack feel the same way. It's not surprising that they did not participate in this rally. The dishonesty and outright fraud is something even the most casually interested of them can sense and don't want to be involved in. As long as they continue to sense this, the equity markets will never be again for them the investment vehicle it became after the creation of the IRA and 401K in the eighties. It is this sense that Americans have about their markets and their government that will eventually assure the downfall of the propped up facade that has been executed by Washington and Wall St. over the last year and a half. I expect the inevitable collapse of this facade will happen at some time between this fall and 2013.
I also agree with the poster who said it started with Reagan, peaked out with "W" and it will be Obama who will end up the patsy. Someone with a extraordinarily convincing persona who emerged from virtual obscurity into the White House during a period of just a few years, who will take the fall. That is not a political statement, it's just the way it went and will go. I think both parties are the same and a sham. We live in an Oliarchy, not some Democratic Republic Americans have always thought they lived in. This didn't just happen. It's really been this way since the beginning of the "Republic." It has was always been "About the Benjamins" even when the actual Benjamin was still alive.
Yes started with Reagan in 1982 - thats when the 401k / IRA programs started. Ironically the housing bubble started in 1982 as well and not in 1995 or 2000 !! Check the housing graph at housingbubblebust.com. Also read up on the Garn-Germain Depositary Act of 1982 and the accompanying deregulation of banking (system went to hell basically - but what I dont know is Volcker's role in that game).
it is all related to capital flows and the economoic confidence model. For the near future the flows are toward liquid assets, including stocks and commoities. In a floating exchange system, it is not likely for all stocks to go down 90% at once as they did in the 1929 timeframe, and also, the equity markets' tops did not coincide with the peak of the economic confidence model, so that was not THE high in 2007. The high should be around 17200 in 2015. However, housing peaked with the peak in the economic confidence model and is down for the count until at least 2032. If you rea Martin Armstrong, all this insanity starts to make a small degree of sense.
What is the "not to distant future?" a year, two? or less?
One element that has been brought up many times, and I am surprised didn't make this list: what are your options? Sitting in cash? Cash is getting destroyed right now. Bonds? I see a lot of "book talking" going on in that space. Gold? A dangerous play with the level of manipulation that gold has always attracted from private players and governments alike. The choices around honestly aren't that much more attractive than stocks. It's all crap.
I think fraudulent valuation has a great deal to do with this, don't get me wrong. Many who are buying equities say they are doing so because the earnings are coming in well. So what they are seeing is making them buy. The question then is logically, "Do you believe those earnings?"
I am SO tired of the story that has been replayed throughout the last 6 months in the MSM of "now that the market has seen the easy money, they are getting more picky. Beating lowered expectations is no longer going to be enough." That would be a great argument, BUT they have been saying exactly the same thing for 6 months, and lo and behold, people continue to accept day after day the same "beating of lowered expectations".
I simply believe very little these days. I'd love to have the conviction of the gold bugs, but I don't. I see no safe options right now, and I see pain coming, lots of it. No one has yet showed me a way that I believe in in how to avoid it. The most important thing anyone can do to my mind in a situation like this is get out of debt! That is the one thing that gives me piece of mind. I owe no one anything, and if my holdings go to zero, that sure beats -infinity (=where banks are taking the loans they made during the past 20 years).
Scary times. --Boris
Here is 1 theory:
$1.25T of MBS. That is all I needed to know to get the hell out of USD and into oil, gold, copper, CAD, AUD, etc. on March 18th of last year.
Now that the MBS program is coming to an end, at least temporarily (and yes, I will know if they try to buy surreptisiously in that market, it ain't like the stock market), I am a bit concerned about my anti-dollar positions. The failed fiatco might stage a rebound against real assets at least temporarily before Bernanke start buying again.
You people could have FRAUD ass-rape you in broad daylight (did in fact) and still ask why your ass suddenly hurts.
Give me a break, no KY, all sand paper, you're smart enough to figure it out. (But you will keep going back to denial, since that is easier to digest than systemic criminal fraud perpetrated at all levels).
Wake up to reality and get some preparation-H already.
http://www.preparationh.com/
Hi Karl - welcome to ZH! Don't worry about the ban hammer, the proprieters here aren't egotistical control freaks.
>He acts like we still have a Constitution, for Crissakes !!
Good argument up to that last line. I'll assume you're kidding.
It's quite simple.
Let's say for example I am JP Morgan. I bought $10,000,000,000 in mortgages. Those mortgages are now worth $5,000,000,000. I have to sell assets (stocks) to meet collateral requirements. This leads to a stock market crash.
The Fed buys those mortgages @ par. Instead of taking a $5,0000,000,000 realized loss, I am made whole. I take that money and buy stocks. The stock market rockets 70% off the lows in a matter of months. I would not have had the capital to inject into the stock market had the Fed not made me entirely whole and than some.
I used these figures for demonstration purposes. This was not exlusive to JPM either, but was done with every financial institution that had bad mortgage paper. With that said, the bad mortgage paper is out there but it is now on the balance sheet of the Federal Reserve (which does not buy stocks, but makes it possible that PD's can)
There are several other Fed sponsered programs that acted in the same way.
That is correct. The bad assets have been firewalled within the Fed. The trouble is, the Fed could not absorb the derivatives, only the paper/assets that are the "real" assets upon which the CDS bets are placed. But for now, the Fed is Yucca Mountain, the bad paper sealed up where it is thought it can do no harm. Even better, as the radioactive material was traded for FRNs that could be used to buy other assets to reflate the economy. And the Fed is not only the Lender of last resort, but the Eternal Holder of Last Resort. It is the Event Horizon, a phenomenon that simply is one of its properties as the American Empire's Central Bank issuing a peerless reserve currency. The examples from physics are numerous: space and time appear "normal," until you approach light speed. The rules change at its periphery, because they can change. For instance, what does a "loss" mean to the Federal Reserve. Nothing. Just print it away. As long as King Dollar rules, there is nothing that prevents that. To the extent the paper held to maturity works out, great. But any loss can be backfilled by printing, as long as King Dollar rules.
The one remaining vulnerability: QE and the Empire's debt. All other issues are subordinate to that one. QE allows for some flexibility in managing this very big problem, but whether infinite printing can occur seems the big question mark. I think not.
I completely agree with Karl on the zoom-zoom in equities and its timing. Earnings in the financials are signifigantly puffed due to overvaluation of impaired assets.
I also agree with his assessment of the degree to which the SPX is overvalued as a consequence.
I DON'T agree with his premise of fraud in the criminal sense. In fact, the MTM suspension does have earlier precedents, which is exactly what the boyz and girlz cited to justify last April's adoption of the suspension. All the emergency powers bullshit kicked in from the RTC and LTCM banking / S & L fiascos ( which eventually worked through relatively mild asset impairment via the easy credit and low interest rate schemes....emphasize " relatively " ) . Suspension a year ago was goaded through the petrified Congress by the UST, FED, the SEC and waterboarded onto FASB and the IASB. F/F got grandfathered into the game as a big bonus, too.
But of course these 20th century remedies didn't require figuring through the derivatives dilemma.... the most complicated dimension of this Great whatever it is now.
Now we are at the one year anniversary of this ill-fated scheme and the asset values are signifigantly disfigured and unable to reflate without the credit pump, which will be busted out for the duration of true asset pricing discovery. Meanwhile, banks trade inside for earnings and resume the bonus taking....knowing full well this baby's gonna' blow when some day King Kash Flow pops in to stink up the party.
There's tons of underlying frauds, for sure, but the plan to deceive on balance sheet fitness was 100% USDA government approved. And it is international in scope. Sorry....Banksters get a pass on criminal fraud. Moral fraud is another matter.
The true crime is the incompetence and corruption associated with improperly assessing the depth and duration of asset impairment. The true crime is committing trillions from the taxpayer into a black hole without any definition or demands regarding deliverables.
So this deceit is not private sector fraud at all. It's an international conspiracy to reflate value that has gone horribly wrong for 1 1/2 years. Governments backtracking through wreckage by their own hand to display truth NEVER happens. So it all must go on to failure. That's the way it is. I don't like it any more than the next guy.
I love reading Karl, but he needs to redefine what this misrepresentation truly is. Fraud is too convenient to describe the current situation with balance sheets....public or private. He acts like we still have a Constitution, for Crissakes !!
wrong, wrong.....wrong! Each and everytime abbey joseph cohen gets cnbc airtime sporting a new 'man'do - "poof" - market ralley.
The market should be around 4000 by now, and it will be. The reason it's up, is because of cheap money, so the TBTF banksters can keep their proprietary desks going. Which means, so they can try and write down their CDS, etc., aka bad paper. Plus, make a profit at the same time. Next, the Fed., is jacking up the market, anyway it can. Once the mid-term elections are over, once the Presidential elections are over, goodbye the smoke and mirrors. As a liberal, this all started with Reagan, it peaked with W., and O is caught, watching the house burn. He could have done more, but since this country is controlled by the DOD* aka Pentagon, and by corporations, O is screwed, so is the American public. Plus, O can't do much anyway, when the money is gone.
*BTW, the DOD, for those who dislike Socialism, is just that.
lol, the fascist oligarchy cares not if the person in office is a democrat or a republican, now go back to arguing over abortion and gay marriage while rome burns
Did you leave out Robie Rubin and the Clinton gang because you are a liberal, or because they have no complicity?
We were just hugely oversold in March of last year. There was nowhere for sentiment to go but up. The market had to rally a bit to get everyone optimistic and fully invested again. Now the conditions are set up for another leg down.
We were not oversold in March 2009. We were still 3000 points (on the Dow) from a historical fair value. If not for our artificially defalted Chinese goods & Indian services, our Dow will have to be at 3000. With jobs bleeding daily (dailyjobcuts.com) those Chinese jobs & Indian services will HAVE to come back and that will take the Dow to 3000 (but people will be a lot happier) !!!
Bernanke bucks. Every investment manager knows the books are cooked, but they have no choice bit to ride the tiger and hope they don't get eaten at the end of the ride.
Because there were more buyers than sellers.
on massive volume as well...
Legalized, government accounting fraud, massive government intervention and HFT / computer gambits.
Dumb money by definition must lose so reason 1 is wrong.
Temporary juice would have had the same effect on all dollar denominated assets like houses, food and gas so that's wrong.
Inflation? see point 2
Evidence of robot and HFT is there especially on low volume rally days but why have all global indices rallied simultaneously? Is this an international conspiracy? No prop desk has that much liquidity.
Fed funding the front running of futures sounds plausible but again why was it so wide spread? Did every CB do the same?
Fraud? Absolutely.
No easy way to determine exactly what each index is worth especially when it comes to DTCC cleared counterfeit trades. (Opposite to failed trades with naked shorts where the supply/demand of certain stocks is artificially manipulated). With this scheme, you don't need investors or even liquidity. So long as there's no major run on stocks by those actually investing, this will last for ever.
ozziindaus,
I have a hard time to picture the reverse of a naked short sale; does that work like a real share is traded for non-existent money?
Another way to reduce the amount of outstanding shares is to call in loaned-out shares that someone sold short. That trader has to borrow other shares or to buy back.
If I remember correctly it got hard to borrow shares during the financial crisis and that is still the case.
Another part of the market gains is probably inflation; stocks and gold move up in tandem.
Since may 2009 dow/ gold is almost flat between 8.6 and 10.2