The Dow is up around 272 points, with the financial components leading the way. Pardon me if I don’t get excited by that. Gold and Oil stocks are holding their own. The wire service reports that, in a letter response, the US Treasury says Bear Stearn’s (BSC) assets are mostly mortgage-backed securities that include some "related hedge investments". S&P has placed Republic of Iceland long-term foreign currency and AA long-term local currency sovereign credit ratings on credit watch:
‘A-1′ short-term foreign currency and ‘A-1+’ short-term local currency ratings on Iceland, along with the ‘AA+’ transfer and convertibility assessment on the sovereign, were affirmed.
9 Comments
April 1st, 2008 at 12:03 pm
Will this be an April Fool’s literally? Meaning is this is head fake into fooling the bulls or are we being fooled into thinking things are worse than the numbers show? I still think we are in a overall downtrend but it seems to me we are at an important inflection point at least in the short to intermediate term whether the trend will be bullish or bearish in the next few weeks/months.
April 1st, 2008 at 12:06 pm
Question……will the lower high/lower low conventional wisdom downtrend be “broken” if we close higher than the 1353 March 25th close on the SP500?
April 1st, 2008 at 12:20 pm
John -
I couldn’t agree with you more. We are definitely in a longer term downtrend, but I think we may be at an inflection point for the shorter / intermediate term. Like I mentioned a few weeks ago, when the market moves up in the face of bad economic data, it tells you something. Remember back in December and January when even “good” news was met by massive selling? Now you see “bad news” met with buying. Since March 1 we have seen all kinds of financial problems and yet the DOW is actually “up” since that time.
We may need to rally all the way up to the long-term downtrend line before we see any kind of stronger decline in the market.
April 1st, 2008 at 12:20 pm
Chuck says: Only in the intermediate time frame… longer term trend: ‘bear trend’ is still down.
April 1st, 2008 at 12:29 pm
Dave/John:
I’m going to disagree with all of you, well, kind of. I’m not saying we don’t have some upside here, but weeks or months of it before the next down leg? No, I don’t think so. Yes, I’m watching the charts, but I’ve seen some real craziness in these charts. So many bets are off as the Fed has thrown the rule/regulation book out the window, but don’t think that means they are going to save the day (or week, month, whatever).
April 1st, 2008 at 12:52 pm
Lisa -
We aren’t too far apart here. Don’t get me wrong, I don’t think the fed has saved the day yet. I think they have started the process, but there is still a lot of work to be done. By no means are things “straight up” from here, but I just don’t want to be very short of equities until we run into some higher resistance point. I don’t know if that is days, weeks, or months, but I don’t discount any possibility.
P.S. Unfortunately I am not long anything either. I have a really small UNG position and all the rest in cash. I am not going to chase this rally and will probably wait to see how things shake out over the next few days. If the market has a follow-through day tomorrow my view could change.
April 1st, 2008 at 12:56 pm
Short the strong open tomorrow.
April 1st, 2008 at 1:00 pm
Hi Lisa,
Sorry I didn’t mean to say/imply that the market is going to be rallying for the next month or more. I suppose what I was trying to say is that we are hitting some important milestones today or very soon which will probably indicate the direction the market trades in the short term. The downtrend still intact long term but seems on the razors edge short term.
April 1st, 2008 at 1:19 pm
No need for any apologizing, I know you guys understand the downside risk. It just scares me a bit to hear people talking of rallies, as I watch traders get excited and buy-in, only to lose their money. I apologize to you guys if it sounded like I doubted your intelligence concerning the risk factors here, you are smart traders. I’m really angry about the manipulations in the market via the Fed Govt and I’m sick about the level of fraud we are witnessing. Even more sick about the amount of money people are losing in their retirement accounts, through no fault of their own.