The Pain Will Continue

By iamned - Last updated: Wednesday, April 22, 2009 - Save & Share - 5 Comments

Yesterday was undeniably a letdown for bears with the S&P 500 closing at its high of the day for a gain of seventeen points. Already, signs of desperation and disappointment are beginning to set in again. Frantically, short sellers are reviewing their charts looking for any glimmers of hope that Monday’s plunge wasn’t merely profit taking after a historic six week rally, but the start of a protracted downtrend, as well as an opportunity to recoup large losses.

Virtually everyone who shorted on Monday is underwater because the market plunged in the first hour and then churned for the remainder of the day.

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A retest of 740 on the S&P 500, as so many are hoping for, would be be too profitable and obvious for short sellers. The pain will continue. Just as this bear market was unusually steep and abrupt, the recovery may be, too. I don’t think short sellers will have the luxury of a protracted whipsaw deterioration like during the 2000-2003 tech wreck.

It’s also amusing how stress tests, ppip, tarp, IBM, Germany, subprime, Detroit just doesn’t move the market anymore. It seems the market is immune to bad news and keeps going higher. That’s because none of those stories are much of a big deal. No one cares about stress tests. No one cares about TARP or Detroit. No one cares about the fake recession. The huge funds run by smarties that move the market could care less about deficit spending, and instead they keep buying stocks like Google, Potash, Apple, Mastercard, and Amazon.com because we’re in a globalist new world order of hypercapitalism, spendism, web 2.0, materialism, and consumerism. We need to widen the wealth gap and increase consumer debt & spending so that cooperate profits and stock market goes up.

A widening wealth gap is paradoxically a sign of economic progress and advancement of western civilization. A thousand years from now when mars is terraformed and the DJIA has to be expressed in scientific notion you think there won’t be some people with unfathomable wealth, and others still confined to serfdom? In a globalist society, executives have a increasingly important role, which justifies their disproportionate pay. Efforts by the government to regulate executive pay, free trade, and compensation would hinder the economy, innovation, and ultimately delay the transition to a type 1 civilization.

rgrg

There’s still a lot of belly aching over the PPIP program by the deficit hawks, but as always their impetus is a sadistic desire to see the US economy and stock market fail than by actual facts and logic. My response to these sore sore losers is as follows:

Keep in mind that taxpayers don’t pay a penny of the bailout or stimulus, and high debt levels are sustainable as I write in more detail here iamned.com/blog/?p=190 The Chinese will keep buying our treasury bonds, and income taxes have not risen a penny since George W. Bush’s original tax cuts.

I concur; the Geithner and Bernanke doing a good job. We need to bailout the too big to fail and preserve free market capitalism. Deficits just don’t matter.

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In addition, I endorse tax cuts for the rich in response to redistributionist, welfare liberals who claim that taxes are too low:

But it’s the top earners & entrepreneurs who create jobs, efficiency, and economic prosperity for everyone else. That’s why they are most deserving of tax cuts. Low taxes is one reason why the US economy has done so well compared to the Eurozone.

Exactly. It’s liberals who want to spread the wealth around, as Obama even admitted during the third debate against McCain.

There was also some hemming and hawing yesterday regarding Caterpillar’s poor earning report as being harbinger of deepening recession, which I dismissed as trivial. Apparently the market also shared my sentiments with the DJIA surging over 120 points.

Sorry, but the market’s surging. Caterpillar is just one tiny part of the overall economy. There are many bright stops like large cap tech and fertilizer.

I agree. MOS and POT stock have nearly doubled from their 52 week lows because the global economy is recovering. Rising grain & food prices is good for the economy because it debunks the deflationary spiral.

I’ll conclude with an easy listening song that makes for a good soundtrack for this bull market.

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5 Responses to “The Pain Will Continue”

Comment from stats79
Time April 23, 2009 at 12:33 am

You’re kidding, right? Nobody is this stupid.

Comment from TJ
Time April 23, 2009 at 4:45 pm

This graph is highly instructive.
http://www.elliottwave.com/images/futuresfocus/20090420_nico.gif

I shorted the S&P500 on Friday up around 870 (I follow someone who is great a picking tops and bottoms).

After a breakdown like Monday, it is classic to retrace back to where it broke (Friday’s low around 862) then fall again. Bingo, here you are.

Looking at the charts, don’t be surprised if it retraces back to 850 from here (now 840), or if it breaks 815 then retraces to 840.

As for whether this was a bear rally or a new bull, consider this:
http://www.elliottwave.com/images/futuresfocus/20090420_nico.gif

Comment from TJ
Time April 23, 2009 at 7:08 pm

http://seekingalpha.com/article/131782-spike-in-insider-sales-points-to-pullback?source=email
The Insider Sales Ratio chart (from Barrons) shows a huge spike in insider sales.

Comment from ned (administrator)
Time April 24, 2009 at 12:06 am

stats79 :
You’re kidding, right? Nobody is this stupid.

I’m the third wisest person in the world. Who are you?

Comment from Ali
Time May 13, 2009 at 8:02 pm

ned (administrator) :

stats79 :
You’re kidding, right? Nobody is this stupid.

I’m the third wisest person in the world. Who are you?

Bob’s your uncle.

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