Stocks recover from sharp losses

AP via Yahoo ^

[Slapshot68]

"Wall Street pulled off a stunning comeback Wednesday, surging higher in late trading and wiping out what looked to be yet another precipitous decline. The Dow Jones industrials, down more than 323 points in earlier trading, ended the day with an advance of just under 300 points, according to preliminary calculations."

That's a lot more complimentary than ABC News radio which called today's comeback, "an erratic day on Wall St."

[Slapshot68]

That's a lot more complimentary than ABC News radio which called today's comeback, "an erratic day on Wall St."

[Moonman62]

The home builders were way up. They were in the green, even when the market was down this morning.

[Mygirlsmom]

D@MNIT!!!

(Said in my best Dem-impersonation voice)

[maine-iac7]

a stunning comeback

a stunning comeback ???

Can those words have been retrieved from the MSM's computers without a massive breakdown - ERROR ERROR

[KC Burke]

There was a lot of "buying in" on the low dip this morning, IMHO.

I think that many stocks that slipped, slippped due to market trends alone and now is the opportunity to buy in at a tight price if you are still a Bull.

[taildragger]

Can you say Dead Cat Bounce......

[Beatthedrum]

The more I look at the way the stock market works, the more I’m convinced it’s an insiders game. This big move of over 200 points in less than 30 minutes was triggered by program trading. The range on the day was over 520 points.
That’s not rational trading based on value. Arbitrage, hedge funds, all kinds of complicated programs seem to be driving the market direction. I’ve read articles that the larger hedge funds saw this whole sub-prime mess coming a long time ago and bought positions that made huge profits when the whole mess came down.

It’s like the money people put into the market; through their 401 K funds, through buying stocks/options on their own, through the mutual funds, ETFs, they buy - is simply the pot for the game and the insiders are lining their pockets with other people’s money.

The MSM is blabbering about all the money that’s being lost, well billions are being made by the insiders at the expense of the public who funds the game. That doesn’t mean you can’t play the game, try and learn why and when things might happen - but you are still only guessing. I bet 90% or more of the general public don’t even know that you can make big money when the market does down - puts on stocks, short selling etc.

The insiders will wait till they have scratched almost all they can from this correction and start buying again. Soon the public will jump back in and once they have pushed it up enough, then the next “correction” will be engineered.

What a racket and it’s all legal...Go figure

[Dead Dog]

Does a cat bounce this high?

[Don Corleone]

The libs and the gummint just don’t get it. Leave the dang economy ALONE!

[Dead Dog]

or...A cat named Soros?

[Non-Sequitur]

, "an erratic day on Wall St."

Well it was down over 300 then up over 300 then closed a just under 300. What would you call it?

[in hoc signo vinces]

http://finance.yahoo.com/

It most have pained the folks at yahoo something awful to have to have a top story of a Dow “surge”....

[dragnet2]

The insiders will wait till they have scratched almost all they can from this correction and start buying again. Soon the public will jump back in and once they have pushed it up enough, then the next “correction” will be engineered. What a racket and it’s all legal...Go figure

I see the same thing.

[taildragger]

Dog,

We are down about 16-17% from Oct 12th. Let us say we have bottomed and are up 2%, that still means we have 14% to recover, but take a look at the S & P chart, not impressive in my book.

I still think we are in new territory here with crippling personal and Federal Debt. A consumer driven economy coming off of 2 bubbles (2000 tech and housing) gets more of the medicine that caused the last mess, i.e. easy money.

Tightening/re-engineering of the every Federal Dept. may not happen in my life time so we are stuck pulling more levers.

I think the man behind the curtain, may be running out of levers. Toto this isn't Kansas anymore....

[Mike10542]

If a recession does occur, the blame should go solely to the media who has been beating the drum of an upcoming recession for the past I don’t know 5 years!!! The media and fear have combined to create the hysteria about a massive recession, which still has yet to materialize. God I hate the MSM.

[CharlesWayneCT]

SO a clever daytrader could make money on a 600-point swing during the day today.

Wow.

Only 2000 more points to go.

[JasonC]

Sure right, that is why the biggest wall street houses are taking huge whopping losses, because they are always right.

Get a grip. Volatility spiked to over 33% per year levels and that degree of panic was an unmistakable signal to people's built in trading strategies, that things were overdone, too much too fast. Add in market talk that the Fed might go ahead and cut again at the month end meeting, on top of the 3/4 done yesterday, and that is quite all you need to explain today's ride.

[dfwgator]

“Don’t call it a ‘comeback’”

[in hoc signo vinces]

so what’s that...6.5 days worth of trading? :-)

2000 points is nothing...all the money that was taken out...will, probably, go back in...hoss....

[in hoc signo vinces]

Because it never left...ha!

[L,TOWM]

Buying a put is as easy as buying a call...

[reagan_fanatic]

"Toss me another bottle of Chivas, darling."

- Ted Kennedy upon hearing the news

[L,TOWM]

Would’nt surprise me too much if we got closer to that 12,800 point DJIA support level we had from July until the end of 2007 before we go back down again. Call it 12,600.

Of course, it would’nt surprise me too much if we see 10,000 by Valentine’s Day.

Or both...

[From The Deer Stand]

That's a lot more complimentary than ABC News radio which called today's comeback, "an erratic day on Wall St."

There they go again -- talking down the economy. But, then again that complaint was could only be used against Republicans when Clintoon was president.

[Candor7]

The MSM has been whining since noon about the rally in the market.

How far will these Dem slimes go, they traduced the war effort, BUT we surged and won in Iraq. Now they want to wreck our economy by destrying confidence in it at home AND in Asia. It nearly worked.

They DO NOT want a Republican , especially a conservative Republican in the White House. The MSM will do just about anything and say just about anything to ensure a Dem victory in November. What a laugh they truly are. Figures don't lie, and I can hardly wait to see the economic indicators at the end of January. Then watch the MSM gloom and doom all over again.( Your glass is half empty, not half full!! We are going down the drain!!etc. SARC.)

Well, hold on to your hats, because there are still several conservatives toying with the idea of running under a 3rd Party banner.

[inkling]

Wait a minute! You mean that Chicken Little was wrong?!

[JasonC]

Debt is a problem, but not the federal part really. The real issue is that financials were about a fifth of market cap by late last year, but with a PE of 8 - while the market average PE was like 17. Do the math, and that means the rest of the market was selling for something like 25 times last year's earnings. So are midcaps. And small caps. And the larger tech stocks in the Nasdaq 100.

The market only looks reasonably priced if the very high peak earnings of the financial sector are sustainable. The financial write offs on the last 6 months are screaming that they are not. If financial sector earnings fall two thirds - still positive, not even on a loss - then the market wide PE at year start levels was 25 times. And that multiple on cylical high earnings, not low ones.

The market sees deflation, from the leverage of banks working in reverse as their capital is destroyed. They fear a rapid contraction in the effective money supply as banks strive to meet capital adequacy requirements by reducing their loan books 12 to 20 times as much as their reductions in capital, from losses.

If you look at the ratio of the SP500 to GDP, it is at cycle peak levels. If yoy look instead at its relation to corporate profits TTM, it looks fine - but that depends on that level of corporate profits being sustainable. Corporate profits are a record level of GDP right now, for several generations at least. And a huge part of that is the outsized profits of the financials, specifically.

If the people simply can't pay them, then they simply won't, and financial profits will fall. Corporate profits will regress to their mean relation to GDP. And if so, then stocks are simply too high.

Longer term, it would be perfectly normal for it to take 15 years for the market to sustainably surpass the epic peak of 2000-2001. For every earlier approach to that level to be an unsustainable local high water mark. That is the time scale to surpass major market tops (like 1968, or 1929 e.g.).

We got to that one because people believed asset prices could rise 15% per year in an economy only growing 6% per year. House prices did the same thing in the 5 years after that, and commodity prices are doing it now. Well, they can't.

[Dead Dog]

Could be, I’m just not convinced we are that hard off on personal debt. I do think we could fend off a recession simply by stopping Federal Spending, and start cutting taxes as the GDP grows. The slowly start cutting social spending while cutting taxes. That would give us a solid two decades of quality growth.

If and when we start seeing layoffs in mass, then I’ll go into bull mode. But right now, with a 30 year fixed at 5.5% apr...I don’t see the credit cruch everyone is talking about either.

[Beatthedrum]

Huge whopping losses, I must have missed that part. I see lots of huge salaries, huge profits in underwriting IPOs, lots of traders still on the floor ?

Program trading, hedge fund positions, would seem to me to be the reason for today’s large swings, not because the billions that were moved into money markets this month, suddenly decided to move into buying stock today.

I don’t think I have to shed any tears for the major brokerage firms on Wall street anytime soon.

I stand by my position that the markets are an insiders game. That doesn’t mean you can’t make money, it’s just not as easy as some guy at a hedge fund.

[JasonC]

If you missed the huge whopping losses, you clearly own no financial-firm stock.

Everyone else on earth knows what I mean, and that you are smoking something.

[Freedom_Is_Not_Free]

Excellent post! Thanks.