The Bad News Rally

5Hill

from Samurai Trader.

With horrible news and a gap down at the open, followed by a sharp sell off early, what would you expect? Why, of course, a test of support and a subsequent rally, and that is exactly what we got. 818 was the critical level to stay above to keep this rally alive, and that is exactly what we tested today, bouncing off it twice before heading up. We fought our way up to just about break even with a little more than an hour to go, then rallied sharply.

One factor was a reversal in treasury yields. They were negative most of the morning, then reversed just befor the market rallied.

The Nasdaq outperformed the SPX. It did not quite test the previous low, but came pretty close. Volume is higher on up days than on down days.

The Russell 2000 started the day weak, but ended up outperforming the SPX. The trend line has been broken for a second time, and it might hold this time. 473 is the next challenge here, and we aren't that far away.


Financials are leading this rally. they lead the last two rally attempts, both of which failed miserably. The third time might be a charm, but I think it is going to need a lot of help. Stocks bouncing big off 52 week lows is not real leadership.

Late mortgages and foreclosures are now at record levels. With the trends in unemployment that we have been seeing for the last year, I don't understand why Paulson and Bernanke cannot connect the dots here. If your income is zero, what good is refinancing a mortgage going to do you?

green

" I don't understand why Paulson and Bernanke cannot connect the dots here. If your income is zero, what good is refinancing a mortgage going to do you?"

lite1067

原帖由 green 于 2008-12-5 23:24 发表 " I don't understand why Paulson and Bernanke cannot connect the dots here. If your income is zero, what good is refinancing a mortgage going to do you?"

ＵＳgovernment has no other choice but to print more $$ and throw it out at its people. Inflation is the only way to dig US out of the deep hole. but they have to find an excuse to distribute the $$ and this is it.

bigbadwolf

多谢五指山。

green

原帖由 lite1067 于 2008-12-5 23:46 发表 ＵＳgovernment has no other choice but to print more $$ and throw it out at its people. Inflation is the only way to dig US out of the deep hole. but they have to find an excuse to distribute the $$ a ...

So far it is not working, we are still in the downward spiral of deflation, but who knows, when things are accumulated to a certain level, the pivot point could finally show up, then we will be faced with different problems.