Stocks surge after data hints at housing bottom

[liberal N proud]

Pending home sales for March rise; construction spending gains

NEW YORK - Investors are rushing into stocks Monday as surprise increases in pending home sales and construction spending offered the latest signs that the economy is stabilizing.

Stocks surged roughly 2 percent, including the Dow Jones industrial average, which jumped 165 points.

Investors have been more upbeat about prospects for the economy in the last two months and Monday's reports bolstered the case that the economy's slide could be slowing.


http://www.msnbc.msn.com/id/3683270/

Index Last Change % change
DJIA 8376.80 +164.39 +2.00%
NASDAQ 1749.30 +30.10 +1.75%
S&P 500 899.83 +22.31 +2.54%

[CoffeeCat]

1. Okaaaaaaay...

So, last month--stocks were "rallying" because many insolvent zombie banks were turning "record profits".

Now, this month, the stock marketing is "surging" because some people think we hit the housing bottom--even
though most forecasters don't agree with that. Because Wall Street says we hit a bottom...all is well
and the stock market is a bed of roses.

I give up trying to understand any of this.

[Occam Bandage]

2. What's hard to understand?

The stock market is going up because many investors think things are improving and so are anticipating a higher market later. Many other investors do not agree with that assessment, but they don't think the market is going to drop significantly either, so they're just holding steady. Without a downward pressure, the market goes up for the time being.

[CoffeeCat]

5. I think I'm really frustrated right now...

Two years ago, I knew the bottom would fall out on the economy.

I knew the housing sector was going to blow and I also knew that consumer spending was going to drop
like a hot rock--because the economy was fueled, in large part, by credit-card spending and home-equity
squandering.

So, when things tanked, I understood some of what was driving the downward spiral. I didn't get everything
right. There are lots of things that I didn't predict (bank insolvency, credit-default swaps, etc.).
However, things made sense to me.

In my opinion--our economy hasn't felt the full effects of drastic reductions in consumer spending. It's
still happening. So, really---things should get a lot worse. However, the media keeps reporting that things
are getting better. Silver linings are reported--and sometimes I can't determine if these positive glimmers
are legitimate or just anecdotal nonsense that have no bearing on our macroeconomic situation.

In large part, I believe the media has been told to knock of the doomsayer reporting. In effect, I think they
report on irrelevant glimmers, that might exist--but won't stop the train wreck.

I used to know how to make heads or tails of economics. Now, I feel completely unsure.

I get generally what is happening in the market. My problem is that I feel we have an unsustainable economic
model that will continue to tank. So, I'm a bit baffled when the market experiences a big rally--based on
profits reported by banks. Especially when those banks are insolvent--and much of their earnings in due to
creative accounting, write-downs and other smoke and mirrors.

I get that the market is pure speculation. However, I feel like I'm watching a train headed toward a brick wall--while
commentators discuss how beautiful the weather is, while the train is rolling--and how impressive the engineering is.

I feel like I've gone down the rabbit hole. I wonder if anyone feels the same...

[HereSince1628]

3. The volumes in recent days have been lighter than back in the early March rally

I'm watching trading volume, and recent days have been lighter than trading back in the March rally.

Volume more than price will indicate when folks are putting back into the market the money that they pulled out as part of asset protection. I'm still 50% off the table and feeling OK about it.


"Be not the first by which the new is tried, nor yet the last to cast the old aside."

[On the Road]

4. Hadn't been Watching Volume

That certainly suggests a bit of a retracement. Plus it's the beginning of May. The Nov-Apr seasonal effect is over and the turn of the month bump should be complete today or tomorrow.

Of course, if economic omens keep improving that could override seasonality. Sometimes rallies can go on interminably like this. But odds are in favor of a medium-term down period.

[Javaman]

6. and it will drop and surge again. rinse and repeat.

we are not at bottom. There are still thousands more ARM's yet to reset. The gift that keeps on giving.

[Ezlivin]

7. The tunnel at the end of the light

I suspect that all the "good" news we're hearing will sound different a few months from now.

It's amazing how clear hindsight is.