Markets May Be Up, But Current Economic Data Is Still Very Bad

With all the hype and hope surrounding the Senate’s move closer to passing a $900 billion economic stimulus plan, the ECB cutting rates, Obama’s big talk, and all the other pseudo-good news… the S&P 500 is up over the last week.

However, the economic data continues to be very bad, and I believe the larger market trend should continue to be downward. I also believe the recent rally could continue over the next one to two trading days (based on the imminence of the Senate’s stimulus package and Monday's scheduled speech and news conference for Geithner and Obama, respectively), and if it does I’ll be quick to hop on the short side of the market.

Comments

[cabaretewil...:]

The USSR sold of the gov. owned car factories, in favor of capitalism. Now Obama is using communism to rescue capitalism, and this will make matters worse.

Feb 06 08:18 AM

[PFandGF:]

(like I write in my book)

I suggest running from the stock market like it has the plague with chicken pox!

Nothing good is going to come from putting your money in the market because as soon as the dollar collapses all of your gains (if you have any) will be denominated in the USD. Pretty risky bet if you ask me...

prepareforandgainfrom....

Feb 06 08:18 AM

[Paul from C...:]

Yeah, me too. That's why I'm short.

Feb 06 09:15 AM

[ChipSeal:]

In the communist model, the government takes over the banks and then they go bankrupt. In the capitalist model it is done the other way around!

Feb 06 09:40 AM

[OldLimey:]

Try this for size:

1. The 'floor' under the market at around 8000/810 is there courtesy of government-funded trading desks with instructions to underpin the big figures. (Actually, I don't understand why there's so much discussion about this. It's common enough knowledge, even here in London.)
2. We get more uplift over the next week or two or three from the stimulus plan that stimulates little and from the bankers' bonus bail-out.
3. The market gets way ahead of itself in 'seeing' a turnaround that keeps receding. Some piece of badness materialises to spook the longs, and with all the bail-out and stimulus bullets already fired there's nothing left to stop the indexes from finding the floor they should have been allowed to find weeks ago - well below the November lows. Selling simply overwhelms the Bernanke put.

So maybe the little guys are right. They know Wall Street wants their money, and this time around they see through the spin. They'd be slow learners not to - and after what's happened in the last year I'm just not convinced that the retail trade is going to be easily duped. Just a thought.

Feb 06 02:33 PM