As you listen to the bubble heads on CNBC gush about the new all-time highs and wonderful bull market in stocks, consider the chart below. This stock market rally is nothing but a liquidity induced dead cat bounce that barely makes a blip on the radar of bull markets. We are in the midst of a secular bear market. This cyclical bull market within the big bear is getting long in the tooth. As Hussman and others have pointed out, it is on its last legs. Secular bear markets don’t end with PE ratios of 22 and overwhelming bullishness. They end with PEs below 10 and articles in Time Magazine about the End of Equities. Don’t get sucked in by the Wall Street hucksters just before they pull the plug.
The Dow just made another post-financial crisis rally high. To provide some further perspective to the current Dow rally, all major market rallies of the last 112 years are plotted on today’s chart. Each dot represents a major stock market rally as measured by the Dow with the majority of rallies referred to by a label which states the year in which the rally began. For today’s chart, a rally is being defined as an advance that follows a 30% decline (i.e. a major bear market). As today’s chart illustrates, the Dow has begun a major rally 13 times over the past 112 years which equates to an average of one rally every 8.6 years. It is also interesting to note that the duration and magnitude of each rally correlated fairly well with the linear regression line (gray upward sloping line). As it stands right now, the current Dow rally that began in March 2009 (blue dot labeled you are here) would be classified as well below average in both duration and magnitude. However, when compared to the most recent post-major bear market rally (i.e. the rally that began in 2002), the current rally has already surpassed it in magnitude and required less time to do so.
Be Prepared says:
The Bernank ordered this up and, amazingly, with QE, ZIRP, Twist and Re-Twist….. he is finally getting his fake orgy fest of stock hokum. Yummy… all this sloshing money…. makes the crony bankers happy. Of course, I’m left asking “Where’s the Beef?”
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23rd January 2013 at 1:47 pm
Administrator says:
79.6% of stocks in the S&P 500 are overbought: Bespoke
January 23, 2013, 9:18 AM
The S&P 500 /quotes/zigman/3870025 SPX +0.19%starts Wednesday with 79.6% of the stocks in the index overbought, Bespoke writes.
That’s the highest overbought percentage since Oct. of 2011. And stocks rarely remain this overbought for long.
Bespoke defines overbought as between one and two standard deviations above a stock’s 50-day moving average.
As Bespoke noted on Monday, most sectors are following the pattern, with the notable exception of technology. The prolonged weakness in Apple /quotes/zigman/68270 /quotes/nls/aapl AAPL +1.12%shares, and their outsized influence on the tech sector, account for the lag, according to Bespoke.
– Tom Bemis
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23rd January 2013 at 2:44 pm
Makati1 says:
The higher you fly, the farther you have to fall. The Market is a sham, and anyone with a brain knows it. The “extend & pretend” is wearing thin. I suspect that when the collapse comes, it will make 1929 look like a good day on the Street.
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23rd January 2013 at 9:04 pm
Hope@ZeroKelvin says:
uhuhuhuhuuuuuuh oooooooh.
Shakespeare quotes!!!! Can I play? My parents would take us to the Shakespeare Festival in San Diego when I was a kid. I thought that was a totally normal thing and everybody’s kids were exposed to this stuff so it was no big deal in high school when I had to read the plays and sonnets and do book reports on them. Was totally shocked to realize that other kids had never heard this stuff…..
Heh, heh, Shakespeare’s plays are as true to human society as classical Opera as to soap operas – that is, human beings have not changed one fucking iota since the times of Hammurabi.
it is, of course, better when heard in the original Klingon…..
I think this fits for most of what passes for news, or reality, these days:
“Out, out, brief candle! Life’s but a walking shadow, a poor player that struts and frets his hour upon the stage and then is heard no more: it is a tale told by an idiot, full of sound and fury, signifying nothing.”
( Macbeth Quote (Act V, Scene V)).
Or perhaps this:
“Blood and destruction shall be so in use
And dreadful objects so familiar
That mothers shall but smile when they behold
Their infants quarter’d with the hands of war;
All pity choked with custom of fell deeds:
And Caesar’s spirit, ranging for revenge,
With Ate by his side come hot from hell,
Shall in these confines with a monarch’s voice
Cry ‘Havoc,’ and let slip the dogs of war;
That this foul deed shall smell above the earth
With carrion men, groaning for burial.”
From Julius Ceasar, how appropriate given the status that Barack King Ovamatoid seems to aspire to.
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23rd January 2013 at 9:11 pm