Monday, September 20, 2010

It's Official: The Recession is Over!

Put on your party hats folks!  It's time to celebrate!!!!  This recession is soooo OVER!


Damn!  I feel so much better now.  I think it's time to buy a house!  Anyone know a good broker out there?

I don't have a down payment for it though but that's OK right?(sarcasm off)

In case you missed the great news here it is:

"The U.S. recession ended in June 2009, making it the longest downturn since the Great Depression of the 1930s, the National Bureau of Economic Research said Monday.

In Monday's announcement, the NBER said any fresh downturn would mark a new recession, not a continuation of the one that began in December 2007."

Quick Take:

Uhhhh...When did we get out of the last recession?  In fact, now that I think about it, did we ever leave the one that "ended" in 2002?  Anyone that's looked at their 401k since then would tell you no.

The stock market of course loved today's news as we rallied up triple digits.

The bond market however sang a totally different tune when you look at the 10 year:

My Take:

As you can see above, investors started flying into the safety of bonds right around 11:00.

You need to seriously ask yourself why bonds were up on a day the stock market rallied 145 points after getting the great news that the recession was over.

How on earth does this make sense?  The answer is it doesn't.  The market distortions continue and I haven't seen anyone that can explain this type of price action.

The way I see it the signal from the market is very clear: Many investors are still scared to death.  Gold hit new all time highs again last night.    If the risk trade is on then why in the hell are bonds and gold rallying?

More importantly, how is the hell are all three rallying(stocks, gold, and bonds) at the same time?  The market is acting completely irrational right now. 

Where is all the money coming to pump virtually every asset higher?  I smell a rat and I wish I knew what the answer was.  Soon enough we will learn why.  The market always gives us the answers. 

The problem is a lot of the times you get the answers until after its too late. 

The Bottom Line

I'll keep it fairly brief tonight because there is really nothing to analyze here.  All I can say is BUYER BEWARE.

I don't like how the market is acting one bit.  I would still remain very cautious.  If I had to guess I believe stocks rallied based on technicals.

A lot of technicians were looking at the 1130 level because it's the high end of the recent trading range we've been in.  Once we convincingly broke through here I believe the HFT algos kicked in with buy orders which forced some short covering.

The problem here folks is we can't continually trade based on technicals that are being set by computers.  Eventually the fundamentals always matter and right now they totally stink.

Unemployment is soaring, housing prices are plummeting, and the consumer is rapidly running out of credit. 

The market is flashing you a gigantic "warning" sign as safe havens like bonds and gold soar to new highs.

I wouldn't be surprised to see some more upside action after breaking through 1130.  Longer term however I just don't see how any of this is sustainable.

Please be careful out there and don't believe the hype about the recession being over.  If anything the recession is over because we have now sunk into a depression.

Disclosure:  No new positions taken at the time of publication.


getyourselfconnected said...

We have recovered and nothing left to do now but buy stocks.

Jeff said...

And also buy bonds and gold because we know the whole Ponzi scheme will eventually come crashing down.

FRF.Assoc said...

Hi Jeff,
Well, maybe this will help explain the market gyrations:

There is no way that the FED-sters and the banksters are going to let the market take a dive between now and the election. I don't think that the low volume markets are that hard to manipulate with over 50% in HFT, and most of the rest in hedge funds, banks and prop shops.

The multi-nationals and banks may have bought congress and the presidency, but when you buy something, you have to maintain it.

Jeff said...


Interesting stuff.

Missed that on zero yesterday.

You know it's funny. in 2008 everyone was saying the same thing about the markets before the elections.

They predicted there was no way that Bush would let the market fail because he wanted to give McCain his best shot.

How did that work out?

You are right though this market is a different market that has no volume and the emergence of HFT's makes it a different ballgame that is more manipulatable.

It will be interesting to watch. Fed today at 2:30 today.

If they announce no new QE(which is what I expect) the market could selloff a bit.

I think many are hoping for some more juice in order to keep the rally going.