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Did you expect anything different?

Did you expect anything different?

Courtesy of Nicholas Santiago at InTheMoneyStocks.com

Ending of a Birthday Party

The rally from the March 2009 lows was one of the largest rallies we have ever witnessed in stock market history. While the ninth year of a decade is usually a bullish trading year there a very few people who expected an advance over fifty percent off the lows. Many traders and investors including myself would have expected at least one 10 percent correction during that rally; as we all know that did happen. The closest that we did come to a ten percent correction in the major indexes was in June through early July 2009, when the market pulled back nearly eight percent. That was really the extent of it for the year of 2009 as far as pullbacks and corrections are concerned.

Why is 2010 a completely different picture for the stock market? When the SPDR TRUST (NYSE:SPY), Power Shares QQQ(Nasdaq:QQQQ), and Diamonds trust Series 1 ETF (NYSE:DIA) found a low in March 2009 the public was in despair. People believed that the next great depression was underway. Massive liquidity was put into the market by every central bank in the world. Cash literally poured into every toxic asset that was ever designed. Since that time the markets have responded by moving over 50 percent off their lows. Now what? Are we back to normal yet?

Today the markets want to know what is next from Mr. Bernanke and company (other central banks). Like the Janet Jackson song says, “what have you done for me lately”? What is next for an encore? The general problems such as the severe housing crisis still remains, the high unemployment picture has not changed, banks have cut credit lines are still not lending or making significant loans, and spending by the consumer continues to remain near extremely low levels. While the Federal government can create tax breaks and incentive programs for hurting citizens and residents to make them feel like they are getting something, however, can that really fix the problem?

Where are we now? Currently we are in the middle of a correction. If you have ever gone to a party, you know the party must come to end eventually. Well, the market is telling you that the 2009 party is over for now. Yes, someone will have another party along the way. New spending programs will come up to give the markets a lift. However, someone has to pay for these parties and with the current problems the cash is limited. Therefore, while there will be rallies along the way don’t expect 2010 to be anything like 2009.

 


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  1. An understatement…… The realities of deficit spending have caught up with the present and the future? In other words we are realizing this cannot continue and has already undermined any potential value in any markets. The correction will be larger than most realized. A direct correlation to debt/deficits/funny money-easing. Until the administration changes their deficit agendas, absolutely nothing can change long term (and likely short term). When you have people running the show, who have never turned a profit in the real world, or held a real job, this is the result. Of course they were handed a bad hand, but that was given. The promises and hope are not only empty rhetoric now, but the supposd transparency has turned into a bad joke. There is no CONFIDENCE in any of our so called leaders. Largely because we have realized that we don’t have any LEADERS, only politicians who care only about themselves. They are completely out of touch with the work a day world. They are in a different world, a different reality.In my view they are largely all criminals and incompetents. Both dems and reps. If we would prosecute some of the most egregious maybe we could regain some confidence in the system. Barney and Dodd would be a good start. There are plenty more to pick from on both sides


  2. Thanks for the comment, agree with you -  no confidence, none is warranted…