[mrs9x]

Maybe this is an extended rally that will carry over into November.

[Dales]

Hey now, you broke protocol. These market watch threads only go up when the market is tanking. </sarcasm>

It'll be interesting to see if this rally continues, or if it is a bear trap. I personally believe the former.

[Mo1]

Well it's a little early to tell about November .. but it is a nice start for the morning

[Principled]

Maybe this is an extended rally that will carry over into November.

I do expect the market will be close to 9500 by November.

Wishful thinking - and likely.

[Tauzero]

Rally will end in 1-3 weeks, IMO. Possibly lasting into October, to give an "October surprise". :)

[follow your bliss]

You may find this read interesting...

King Report

The Fed says, as of 3/31/02, total US indebtedness is 287% of GDP!!! The 50-year mean is 180.8%!!! It’s the debt, stupid! Debt, not accounting standards or Wall St. mores, is the principal drag on the economy and stocks. Increasing debt service by businesses will reduce future earnings. PS- Total debt is now >$30 trillion, and will rise sharply this year in both the public and private sectors.

Debt is almost 3X GDP. GDP growth must equal 3X (interest rates + debt growth) to just service the debt. The ratio of debt to GDP keeps increasing because GDP growth pales compared to debt formation. This totally and irrefutably debunks Easy Al’s productivity miracle hokum. The bubble was, and always will be, build on debt. That debt is now the yoke on corporations and consumers’ necks.

The FT: “US and Euro banks and bondholders lent an estimated $500B to the crippled US gas and power sector, new research commissioned by the Financial Times reveals. The figure raises fears that a further string of corporate failures in the wake of the Enron scandal would expose lenders to heavy losses.”

A hallmark of perceived or real intervention in the markets is the 1-day super rally followed by a couple of days of ennui and drifting. Operators are fearful of being caught short but are reluctant to get exuberant due to the artificial stimulus. That’s what occurred on Thursday and Friday.

Barron’s Alan Abelson says talk last week had US Treasury Sec O’Neill asking Wall St. bigwigs to do some ‘strategic buying’ in return for W’s silence on the markets…Merrill’s recent poll of 279 global managers shows 84% say stocks will be higher 1 year from now. Is that capitulation and pessimism?

The predictive power of the stock market for the short to intermediate term continues to diminish. After July 4th, there was a 40-80% rally in tech stocks. Inexplicably, this occurred just prior to earnings releases. One would infer, like we did with LU, that someone knew earnings or guidance would be good. That was not so. It was only wise guys’ over-anxiousness for a buy opportunity. The increasingly faster and violent pace of trading impels wise guys to exacerbate the problem by seeking to implement action sooner and sooner. Now, wise guys are anticipating the anticipation. It’s that ridiculous, and it will continue until stocks fall to fundamental buying levels, or a requisite number of wise guys implode…The best bet for a significant tech bottom could be Q4 on portfolio purging, bankruptcies, etc.

Incredibly, Goldman’s semiconductor equipment analyst put out a buy recommendation the day after Taiwan Semiconductor announced a reduction in capex and issued a pessimistic view of the industry. When quizzed on CNBC about the buy, the analyst admitted that the fundamentals for the group look awful for the next 6 months, but the stocks have fallen so much they’re a buy. Pisanti then interjected that sources told him that some people heard the call Thursday. When pressed by Maria, the analyst denied leaking his call early. What did they expect – the poor guy to say ‘yeah, I called the hedge funds that pay us the most commissions and told them tomorrow blah blah blah’?

For the past 24 years, there’ve been regular banking crises: 1/80 the Hunts; 7/82 Mexico; ’84 Contilly, Maryland and Ohio S&L crisis, Penn Square; ’86 Texas ban collapse; ’87 crash; ’89 S&L crisis; ’90-’91 money center banks at the abyss; ’94 Mexico again; ’97 Asian Contagion; ’98 Russia and LTCM; November ’00 – after Thanksgiving, dollar tanks, Fed starts juicing the money supply, JPM rumors commence. The Fed has papered over each crisis, save the money center crisis. Al used the carry trade to reliquidify the banks, but created Frankenstein-like hedge funds. Volcker prudently removed the punch bowl after each crisis was mollified. Al just kept on pumping. Now, pumping has lost its effectiveness. What can Al do now, if and when the system is threatened?

Few want to admit it, or even address it, but the odds are higher now than at any time in over 70 years that the US could have a DEPRESSION… Rubin, Gore, other Dems are advocating a tax hike. This is a replay of 1930. The political conventional wisdom was the US budget deficit caused the stock market collapse and receding economy so Hoover raised taxes and later FDR raised them again.

AP reports, “Shortfalls in private companies' pension plans soared to $111 billion last year, the highest level ever reported by the Pension Benefit Guaranty Corp.”

Hershey has put itself up for sale. According to Bloomberg, HSY is 8.33 times book value; 27X earnings; and 19X cash flow. The only available financing is equally [or more] overvalued stock.

House Republicans, trying to inoculate themselves from charges of business coziness for November, said they would introduce legislation that will allow the seizure of mansions, yachts, and other personal property from corrupt corporate executives. This can’t be good for stocks or reported earnings.

The SF Chronicle notes state budges are plunging in part because they became overly depended on capital gains taxes. California had $17B in capital gains taxes in ’00, but only $6B in ’01. Any guess for ’02?

Paul Sperry (Worldnetdaily.com) notes exec stock options proliferated after Slick and Congressional Dems removed the corporate deduction for executive pay over $1m (’94).

We’ve been waiting for the inevitable shakeout in gold that normally occurs in nascent bull markets after the first initial strong rally. This occurred in 1984 for stocks. Gold and gold shares peaked in June, about a month after cyclical stocks. In June, copper and industrial commodities started a collapse that continues to this day. Gold fell in concert. When JPM and Citigroup concern threatened to go nuclear, gold was hammered, giving JPM relief from its purported onerous gold derivative book. Of course that coincided with the dollar rally. Contributing to gold’s decline last week is forced hedge fund selling. Hedge funds that are hemorrhaging from picking too many stock bottoms the past few months are now selling winning positions such as gold, euros, etc. This is very common during unexpected moves, and is a cardinal mistake – selling winners to support losers. Gold should fall to, and probably below, $300 in the near future. But as we opined weeks ago, after whatever summer rally occurs, autumn will bring renewed and intensified concerns about the economy and the rumored Iraq excursion. Enjoy the summer respite; unfortunately it will be brief.

Today – Operators will try the upside. Figure rally attempt today, Turnaround Tuesday tomorrow.

[wardaddy]

NASD up/down volume ratio almost 10 to 1. That is simply incredible.

I'm sure the writers on the finance page and Yahoo and Reuters are crying in their morning coffee. No indicators to spin negative thus far today for their cover page.

Are Daschle and Gephardt in upper floor offices with windows? Somebody better lock those windows. G-D, how I do love it...even knowing it's going to get tempered at some point...it's a pretty thing to watch.

Have we gotten off the bicep and onto the shoulder yet?

[demlosers]

Last Trade 1:07pm · 8,591.98
Change +327.59 (+3.96%)
Prev Cls 8,264.39
Open 8,267.99

Elevator going up!

[mickie]

{{{{PING}}}}}}

[SierraWasp]

From CBS MarketWatch.com:

2:13PM Dow keeps on rallying, now up 14.5% from Wed.'s low ($INDU) by Tomi Kilgore The Dow industrials ($INDU) are reaching new intraday highs as it peeks above the 8,600 level for the first time since early July 18. The blue chip barometer is now up 358 points at 8,622, with 29 of its 30 components seeing gains, and 23 of the gainers rallying by more than 3 percent. The biggest winners are American Express (AXP) and J.P. Morgan Chase (JPM), both up 9.8 percent, and the lone loser is Boeing (BA), which is shedding 0.9 percent. The Dow is now up 1,089 points, or 14.5 percent from last Wednesday's intraday low (7,533), which was the lowest level seen since October 1998.

[dirtboy]

Market Watch 7/29/02 (3:40 PM EDT: Dow +404, NASDAQ +66, SPC +42)

And Tommy Daschle's blood pressure up thirty points...

[TBall]

Maybe the market will be down tomorrow, but I'm still going to wake up and watch to see what Katie has to say about today's action.

[RISU]

Look at the price of Gold and Silver, then look at the "next day rallies", inlcuding this one, and it would be forgiven to you if you concluded someone was selling a lot of metal to get cash to buy a lot of securities.

Maybe it will work. Who knows. My question is with all the gold six times over sold already, where is all this gold coming from that is being sold in the market to reaise the cash?

Answer: "thin air".

[sakic]

Anyone who claims to know what is going to happen in the market is no different than the people who run the psychic hotlines.

Some in this thread are here to regale us with the success of their previous predictions. Those kinds of folks only turn up after they got one right.

[sixmil]

Here is what our conservative friends at Investors Business Daily had to say about today:

The stock market met the definition of a follow-through Monday. But not the spirit.

Sure, the percentage gains were impressive. Just about every major index - the Nasdaq, S&P 500, small-cap S&P 600 and Dow industrials - delivered a gain in the 5% area.

Breadth was excellent. Advances destroyed declines by more than 4-to-1 on the NYSE. The Nasdaq came in a little shy of 3-to-1.

Top-rated stocks, the Achilles' heel of so many false rallies, took part in the festivities along with loads of beaten-down names. In past weeks, seemingly strong rallies would neglect to include more than one or two stocks with strong earnings and share performance. Those upturns would barely last through the day, much less turn into a meaningful advance.

The market even showed the ability to shrug off bad news. Qwest Communications over the weekend rescinded its financial forecasts. The No. 4 local phone firm also will restate 1999 and 2001 results after misreporting sales of $1.16 billion. The news at first hammered Qwest's stock, which dropped as much as 26% before recovering for a loss of just 0.01. 

Imagine the effect on the market if Qwest made its admission in prior weeks, when stocks were getting slaughtered on news good and bad. Monday's market showed a major change in character and completely ignored Qwest. The major averages gapped up in the morning and rallied the rest of the day.

But volume offered a mixed bag. Less charitable folks might call it a troubling divergence.(my emphasis)

Nasdaq trading picked up 14%. That means on the fourth day of its attempted rally, the Nasdaq composite rallied well more than 2% on heavier volume than the prior session. That meets the criteria for a follow-through day, which can signal a major advance.

But at 1.93 billion shares, trading just exceeded the Nasdaq's 50-day moving average. On a day when the Nasdaq surged 5.8%, its best outing in almost 12 weeks, volume was just OK? (Most successful follow-throughs have occurred on solidly above-average volume.) The trading seemed especially light, as in the past five weeks trading topped 2 billion 16 times.

NYSE trading actually slipped 1 million shares to 1.804 billion. That follows a big volume drop on Friday. So even though the S&P 500 and Dow marched up 5.4%, the action eased slightly. That's a remarkable lack of conviction when the headline numbers seemed so good. Institutional investors simply weren't buying the rally, at least on the NYSE. The upshot? No follow-throughs for those indexes.

The S&P 600 gained 5.6% on a sizable jump in volume, a solid follow-through. Studies of its past behavior show it to be a somewhat more reliable indicator of the market's future direction. It's not nearly as volatile as the Nasdaq, which cuts down on its false positives.

All you need is one of the major indexes to follow through to confirm a shift in the market's overall direction. Growth investors should turn their attention to fundamentally strong stocks and see which of them are building good bases. A few have already popped to new highs, although their price patterns are fairly erratic. It may take weeks for leaders to emerge.

Recall the dearth of good breakouts last fall? That turned out to be an excellent leading indicator of the market's path this year.

It may pain you to stay near the sidelines as the indexes and battered stocks bounce off the bottom. But major bull markets require healthy leadership. Without that, you risk getting caught in a bear-market rally.