Tuesday, October 20, 2009

How This 60% Rally Differs From Previous Ones

Zerohedge did a comparison of the past six rallies of 60%.

This is the only one with negative year-over-year retail sales.
By far the lowest consumer confidence.
The lowest capacity utilization.
Lowest year-over-year change in industrial production.


Anonymous said...

Interesting post. It is only the 82/83 period in which the time span is similar to the present rally. What followed the 80's though was a 20 year bull run.

The two recessions were not similar in any way. Then interest rates were at 20%, now there at 0. Today's battle is deflation, not inflation.

Do you have any ideas as to what could bet he catalyst for the next sell-off? I'm thinking Japan or maybe Europe.

CP said...

That's an interesting point about 82/83. On the other hand, that had one of the lowest P/E multiples - less than half of today.

I think the catalysts are already there. It will just require a psychological change as to how existing information is viewed.

People will feel so stupid for believing in a rally that was kicked off by allowing banks to report less accurate information. And that was perpetuated with confidence schemes and sweeping things under the rug.

The employment situation is a big factor.

eh said...

A rally is a rally and you can analyze it to death, especially if you're a typical ZH reader who's got plenty of time for that because you've been too skeptical to participate (on the long side). Else you've been trying to short it all the way up.

It's been a head scratcher, I admit.

But pretty much every dip is bought, often rather aggressively.

Earlier after you logged on you saw Etrade had posted a commentary from I guess its investment guru saying, basically, that if the market swooned in October you should buy.