I hate how no one here on this board ever demonstrates market perspective in either direction.

[Zynx]

Even if you combine the last two days of rallies on the back of much better than expected bank earnings, the market in general and the bank stocks in particular are still down mammoth amounts from their all time highs. As for JP Morgan rallying on a decline in earnings or PNC or Wells Fargo(the latter two I have positions totalling about $6000 in) doing the same, much has to do with the fact the stocks have declined so much that if the earnings are not down as much as people expect, the stocks will rally to reflect that.

Let me use the example of a $100 stock with $10 in earnings. If the market suddenly expects the stock to earn $5 a share, the stock could quite reasonably fall to $50. However, if the company reports earnings of $6.50 a share instead, the stock could quite reasonably rally to $65 using the same PE ratio, even though it still reported a 35% decline in earnings.

The fact is that the market is not acting like all is better. Even in bear markets huge rallies can take place. They did in the 1930s, the 1970s, the early 1980s, and many many times during the continuous decline from March 2000 to October 2002. Hell, we had greater than 15% rallies in the midst of the 2000-2002 bear market which was the 2nd worst in the history of the country.

The same problem bothers me in more normal times on this board where with a 200 point decline the world is ending and with a 200 point rally the market is performing some act of conspiracy to screw over somebody or other.

The rally that we have seen in the last couple days has been led by the financials with the realization that the vast bulk of the banks will survive. Indeed, probably every major bank will survive with the possible exception of National City. The lessening of the risk of failure in many of these stocks has chased a lot of the shorts out and thus they have moved higher.

[NightWatcher]

1. but but but oil is down 14$. it's just a matter of time before we see 1$ at the pumps right?

thanks to the internet, we can have a knee jerk reaction well before the ink is even dry on the evening paper. The economy is in trouble. 2 days of modest rebound after months of falling does not mean that everything's ok.

re: the banks. I keep hearing that as many as 200-300 banks might be in trouble in the next 6-12 months. I think that many of them will not survive without FDIC support.

[Zynx]

2. That 200-300 bank figure is mostly tiny banks. There are 8500 banks in the country.

The vast bulk of deposits are in the top 50 banks. I would be surprised if more than two of them failed and even for the ones that do they will just merge them into healthier banks like Wells Fargo, JP Morgan, PNC, BB&T, and so on.

[Warpy]

7. The news over the last few days

indicates that the FDIC support is at least doable, something that wasn't at all certain beforehand. That's the reason for the rally.

I still expect the general trend to be down for some time. In fact, my non financial stocks didn't do all that well over the last couple of days, bearing my bearish mood out.

The banks will be propped up. The market will be propped up. However, they're still letting the consumer sector fail and there are still many billions of dollars in bad loans to be written off by the financial sector.

This is far from over.

[DJ13]

3. This is options expiry week

Dont mistake the moves this week for a trend.

[Zynx]

4. There is that as well, but it never quite has the effect people expect.

I've seen options expirations weeks pass with quite literally 0 impact.

[annabanana]

5. ? On THIS board ?

really?

[truedelphi]

6. Can I ask you what you are expecting people to say??

I agree with your analysis of the market - but don't see how it ties in to anything anyone here has to say.

We are in the middle of a Depression. For many of us in our fifties, we are thinking it may be a Holocaust type event. My husband and I worked hard for twenty years of our lives so that in our mid-fifties we could either
1) retire
or 2) continue working at decent jobs on account of all the good things our references would offer.

Instead, a single family illness wiped us out financially.

So retirement is not part of the picture.

And I cannot work unless I find a job on my own - I have been told to my face at companies wanting to hire that I am too old - that should they hire someone over the age of fifty-five, the health insurance premiums would go up across the board.

If my story was ONE ISOLATED event, I wouldn't bother posting here. But I am constantly seeing other fifty something's who are saying the same thing.

What was the first sign that things were bad for the Jews in the 1930's?? It was not them standing in line waiting for their turn at the showers, it was their enforced unemployment.

The writing is on the wall that this Depression will be far worse than anything before it.

This nation no longer has a Texas or Oklahoma that is stock full of cheap oil - the nation has to buy two thirds of what is needed from abroad.

Speculation and the MidWest flood are going to keep the price of commodities high. Many many families are going to start living on beans and rice. Already ten percent of all Americans are on Food Stamps!!

The manufacturing base is gone - China produces steel, Mexico has the American-run car factories and other car related items production. Our textiles are produced in Bangladesh or other Guatemala or El Salvador. Pakistanis or Indians process our medical records and claims information.

The trickle down notion that globalization would be good for all was thrown in our faces so that none of us united behind stopping it. And as the globalization of American jobs occurred one industry at a time, that strategy was rather effective. I remember the first time I saw "Roger and Me" - I knew what the writing on the wall was, as I had relatives who worked for Detroit or the steel mills. But most Americans thought "Well they should have gotten an education rather than settled for doing DUMB LABOR!"

So now that the computer operator wakes up each morning in New Delhi to go off to his job, the claims processor walks next to him to her job in the insurance processing company, the foreman of the textile plant wakes up in the mountains of El Salvador, the brake pad factory foreman wakes up in Mexico, there is not a lot for many Americans to wake up for.

And the rich will get richer anyway - America's rich already have converted their money to Yen or Euros or even to Chinese currency. Or have bought gold, palladium, platinum, etc some two or three years ago.

The stock market will continue to exist and the black ops running a great portion of it will continue with its insider deals. Q-west didn't comply with George Jr's order to spy on us American citizens - so it was for all intents and purposes forced out of business until Poppy Bush bought it!! Halliburton and any and all companies involved in war, spying, pain and death will continue to have decent returns on their dollar.

[raccoon]

8. Jeez louise!!

"And I cannot work unless I find a job on my own - I have been told to my face at companies wanting to hire that I am too old - that should they hire someone over the age of fifty-five, the health insurance premiums would go up across the board."

As a 50-something myself, I feel your pain. I'm surprised they'd tell you that, though of course I'm not surprised they're thinking that.

Great post.

[truedelphi]

11. Believe me, raccoon, after I was told that, I drove home realizing

That my thirty something son was RIGHT! Everyone of us should always have a cell phone capable of transmittting a record of what is being said to you (WIth the video if possible)

The woman telling me that would have brought her company to its knees in court - if I could prove I was told that, I would have a rather nice amount of change on which to retire.

But right now it is just my word against her word - and by the way, she is no longer there - she was replaced by a person in his thirties (She was in her forties!)

Of course I hardly feel like weeping for her!

[Mike L]

9. When do you think we will see a final (or second major) bottom to this secular bear market?

Every secular bear market of the last 100 years (usually lasting 15-18 years each), has had two major bottoms. My research showed the second major bottom usually comes 8 years after the secular bear starts. The current one started in 2000. That makes us due for another major bottom soon, if history repeats itself again.

[Lex]

10. When a plane crashes, it is a conspiracy to keep Obama's speech

off the TV.

For example only.

Conspiracy Theories R Us.