Rank: Member
Joined: 10/18/2008
Posts: 22
Location: Cape Town, South Africa
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The holiday-shortened Thanksgiving week brought investors an additional item to be thankful for when stock markets closed higher for five consecutive trading days – a rare winning streak last accomplished in July 2007. Worrisome economic reports were cast aside by equity bulls, arguing that the bad news had already been priced in. However, US Treasury Note yields were less sanguine and fell to its lowest level on record. Although there is not yet conclusive evidence that we are leaving the corpse of the equity bear behind (especially with Q4 earnings disasters looming in January), it would appear that the nascent rally could have more steam left. Read all about this in my weekly “Words from the Wise” review: http://www.investmentpostcards.com/2008/11/30/words-from-the-investment-wise-for-the-week-that-was-november-24-%E2%80%93-30-2008/That’s the way it looks from Cape Town. How do you see the outlook?
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Rank: Newbie
Joined: 12/3/2008
Posts: 7
Location: delhi
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The short Thanksgiving week brought investors an additional item to be thankful for when stock markets closed higher for 5 consecutive trading days – a rare winning streak last accomplished in July 2007. The S&P 500 Index has gained 19.1% since the start of the rally on November 21 and 12.0% on the week, registering the largest weekly gain since 1974.
Worrisome economic reports were cast aside by equity bulls who argued that the bad news had already been priced in. However, US Treasury Note yields were less sanguine and fell to its lowest level on record, pointing to deflation concerns and suggesting that investors remained skeptical about the government's latest moves to revive the ailing economy. Importantly, US 3-month Treasury Bills were trading at a minuscule 0.03%, an indication that liquidity was still being hoarded.
A catalyst for last week’s recovery was the announcement of the government’s rescue plan for Citigroup (C), including a direct $20 billion investment and $306 billion in asset guarantees.
With credit markets still not thawing after the introduction of various central bank liquidity facilities and capital injections, the Fed on Tuesday unveiled further steps aimed at lowering borrowing costs for consumers and home buyers. The Fed will buy $100 billion of debt from Fannie Mae (FNM), Freddie Mac (FRE) and the Federal Home Loan Banks. In addition, the Fed will also purchase up to $500 billion of mortgage paper backed by the agencies and will lend $200 million to holders of key asset-backed securities regarding small business and consumer loans.
Has the stock market reached a secular low, or is it just bouncing off oversold levels? On the Fox Business Network, legendary investor Jim Rogers said:
“We’re ready for a rally. I mean, the market in October and earlier this month has had a huge selling climax. I covered a lot of my shorts. Who knows if I’m right or not. But I expect the market to rally for some time. It may rally into next year. But ... this is a false rally. It’s not going to be great. It’s not the end of the problems in America and it’s not the end of the bear market.”
A positive for the bulls is that the period after Thanksgiving through the end of the year is usually a strong time for stocks. According to Jeffrey Hirsch (Stock Trader’s Almanac): “December is normally a banner month for stocks, ranking second [on the monthly calendar] for the Dow and S&P 500 and third for the Nasdaq.”
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Rank: Advanced Member
Joined: 10/24/2008
Posts: 52
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“December is normally a banner month for stocks, ranking second [on the monthly calendar] for the Dow and S&P 500 and third for the Nasdaq
what is the statistical average of "normally", LOL!
It is the same, until it is not.
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