Spring Rally Has Reached Completion
Tuesday, April 14, 2009 17:35What a wild ride these past few weeks have been. Only a month or so ago the Dow Jones Industrial Average traded down to 6,500 amid an onslaught of catastrophic economic news. The market has since rallied 25% from its low with insolvent banks such as Citigroup and Bank of America quadrupling in value. Jim Cramer has called for a market bottom (Again), as the pundits have assured the public that the worst is behind us (Again). Why is it that the people who’ve called a bottom are the same ones who never saw this coming in the first place?
NYU Professor Nouriel Roubini is one of the economists who did see this coming and so we tend to put more weight in his opinions rather than those who have been wrong for the past 3 years (Call us crazy). Roubini believes that the recent market rally was nothing more than a “Dead Cat Bounce” as stated in a recent article written by the NYU professor. “This consensus optimism is, I believe, not supported by the facts,” says Roubini. As for the “Second half recovery” the media is peddling he says “I expect that while the rate of US contraction will slow from -6 per cent in the last two quarters, US growth will still be negative (around -1.5 to -2 per cent) in the second half of the year (compared to the bullish consensus of +2 per cent)”
The charts suggest that the spring rally is either complete, or very near completion. The major averages are coming up against strong resistance with the Dow Jones bouncing off of its downtrend line.
Much of the spring rally was lead by beaten down sectors such as Financials. Morgan Stanley and Goldman Sachs have emerged the strongest in the sector but are failing at the downtrend line which suggests a wave of selling to come.
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Lyon says:
April 15th, 2009 at 9:26 am
I’m a believer……………..you have called this very well from the beginning.
Those shills on CNBC get paid by GE to propagate all the “2nd half recovery” bull sh%t they can shovel……
Willy2 says:
April 15th, 2009 at 10:35 am
Time to go short again !!!!
Marcus says:
April 15th, 2009 at 10:46 am
On the Dow chart connect the Nov. high and Jan high and it ends at 8000 right where the
other trend line ends. 8000 is very strong resistance.
WilliamTon says:
April 20th, 2009 at 12:51 pm
i owe you an apology
i doubted you but should have known better. good call.
Rising Dollar Spells Trouble for Stocks | Charting Stocks says:
April 20th, 2009 at 8:34 pm
[...] week we mentioned that the spring rally had reached completion.The major averages were coming up against major resistance at a time when an oversold rally was [...]
massimo armanini says:
April 25th, 2009 at 8:33 am
I agree with you too weak to be long but i would not bet on a sp500 at 680 again. It seems it has stabilized and could become range bound for a while, maybe a long while…
Travis says:
May 2nd, 2009 at 5:23 am
I would also believe we have another drop coming. The end of most bear markets tend to have a double bottom.
armanini massimo says:
May 10th, 2009 at 8:27 am
Travis, I start to think we have seen the worse. I don’ t expect the SP500 touching 700 again. So since the financial argamenonn seems to not to be a possibility anymore… we might as well start investing in weak days…
John says:
May 28th, 2009 at 2:56 pm
http://www.theinsider.com/news/2199786_Make_The_Banks_Give_Back_Our_Stimulus#comments