Wednesday, November 28, 2007

Bear squeeze 

The stock market closed moments ago, capping the largest two-day advance in four and a half five years. That comes after more than a month of miserable trading; until today, the S&P 500 had not been up two days in a row since late October. What kicked off the rally? A relatively small investment by the Abu Dhabi Investment Authority. It has been a long time since we have seen that kind of leverage out of a single transaction. The fed spoke, the dollar is up, and crude oil prices fell almost $4 to a tick above $90 on news that crude inventories were higher than had been expected. Today, at least, it's all good.

The question is, does this mean that the collective judgment of the market is that the credit crunch will resolve without catastrophe?


By Blogger knighterrant, at Wed Nov 28, 04:38:00 PM:

...Or is it just a dead cat bounce?  

By Anonymous Anonymous, at Wed Nov 28, 05:20:00 PM:

What kind of sick mind would want to bounce dead cats? :D

The "market" was looking for any excuse to buy back in, as some good stocks have been run down in the general "bear mood" that drives the present market psychology. People "in the know" have been saying that the price of oil has been driven up by speculation only, not on real supply problems or shortages.

Collective judgement: where a group of smart people get suddenly dumber when they put their heads together.

Who knows? Next week Iran does some sqawking about this and that, or Hugo Chavez does his usual blustery idiot act, and the price of oil goes up and the market goes down again.

Wake me up in six months.


By Anonymous Anonymous, at Wed Nov 28, 05:29:00 PM:

Stocks and the housing market have been in close sync for 12 years, until this year. Single Family Home index has dropped 50% while S&P climbs.

Good luck to the stock market in breaking the linkage.

- George  

By Blogger Georg Felis, at Wed Nov 28, 05:47:00 PM:

Well, despite the absolute best efforts of the MSM, it seems as spending this holiday season has exceeded expectations. (In school, we used to call that an A before they "normalized" grading)

Think I'll go out and price plasma TV's. My wife won't let me buy one, but at least I have dreams.  

By Blogger Purple Avenger, at Wed Nov 28, 06:44:00 PM:

The question is, does this mean that the collective judgment of the market is that the credit crunch will resolve without catastrophe?

I dunno about that, but I've been reliably informed the democrats just changed an order for 10 truckloads of party favors into an order for 10 truck load of Depends.  

By Anonymous Anonymous, at Thu Nov 29, 10:12:00 AM:

Since there's still very little clarity right now on how far the housing market will fall, and when the bleeding will finally stop for SIV's and mortgage portfolio's, I'm guessing we'll be seeing a traders market for quite a while yet. That means average investors with day jobs should probably put their money to work in longer term, relatively safe investments and forget about them for awhile. Maybe a long while, like another year or so.

Active traders love markets like this one because volatility means there's lots of money to be made, but most people should just go to work and not try to be starter than the market.


By Anonymous Anonymous, at Thu Nov 29, 10:14:00 AM:

I need to proof better- sorry.

When I said "and not try to be starter than the market.", I meant to say, "and not try to be smarter than the market."


By Blogger Purple Avenger, at Thu Nov 29, 08:24:00 PM:

House prices in south FL are down only ~4%...which is nothing when you consider they were inflated by about 35-40% to begin with.

Before the supposed bubble burst, I was told my place would sell for close to $300K. I'd have taken $250K for it and laughed like a mad man if I'd been inclined to sell it (which I wasn't, I like the area and weather). It could be built from scratch acting as your own GC for somewhere in the $150K range even with the high materials costs today.  

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