Replies to post #73832 on Biotech Values

[tinkershaw]

<<<Today may be the proverbial day of capitulation when hordes of people decide they don’t want to own any stocks and sell everything.>>>

I do not think so. Looking at the macro numbers today. Consumer spending was slightly up, but savings rates hit all time highs.

What this means is that there is an utter lack of confidence in the market. Instead of putting money to work, people are putting money under their bed, despite deciding to spend some more money.

this lack of confidence is forward looking. When does one get confidence to invest back in the market? Obama is giving us none. He has promised us a substantial capital gain and income tax increase. He gave us absolutely nothing as an incentive in the "stimulus" bill or in the 2010 budget. We are looking at nearly $2 trillion a year in deficits per year. Producers in the world are bad mouthed, and the entrepreneurial class is shamed in his rhetoric. He for example says he wants to increase home sales, proposes a $250 billion + program on this issue, and then proposes to cut the deductibility of interest for upper income taxpayers, who just happen to buy the majority of homes (on a dollar basis).

I am not making this political, but I do challenge someone to come forward and let us know what is being put forward to reduce this CRISIS OF CONFIDENCE?

Consumers decide to spend more, but at the same time they also decide to keep their money under their pillows. All this money sitting on the sideline, so many stocks on "sale", what else is it at this point in time but a crisis of confidence.

If so, let me know what is being done to resolve this issue? We will not bottom until a complete wipeout with this crisis of confidence IMO. A one day sell off, is likely to be followed by a small rebound and a new wipeout until this crisis of confidence is resolved.

Tinker

[urche]

Dew's call is looking commendable now

I am slogging thru posts starting 3 months back and came upon this prediction by DEW that looks like a fine call at this point in time:

Today may be the proverbial day of capitulation when hordes of people decide they don’t want to own any stocks and sell everything.

If you have dry powder, you can buy shares of myriad fine companies at prices that haven’t been seen in a long, long time.

As this chart shows anyone who followed that advice is sitting on a 20% gain in less than 3 months:

http://finance.yahoo.com/q/bc?t=6m&s=^BTK&l=on&z=m&q=l&c=&c=^GSPC

[DewDiligence]

Factoid: During March-May 2009, the S&P 500 had its best performance for any 3-month period since the rally at the end of the Great Depression in 1938.

Has anyone heard from Noriel Roubini lately?

[DewDiligence]

The S&P 500 closed today at 1002.63, up 1.5%.

The index is now up 50.4% from the intraday low of 666.69 on March 6, 2009.

A 50% pop in just five months for the most important stock index on the planet is probably a once in a lifetime event for most of us.

Where’s Noriel Roubini?

[DewDiligence]

The S&P 500 is up 64% from its low on March 6, 2009.

Where’s Noriel Roubini?

[DewDiligence]

The S&P 500 is +66% since early March and a tiny fraction below its
14-month high set last week. (Does anyone still care about Noriel Roubini?)

http://online.wsj.com/article/SB10001424052748704107104574569463083866856.html

›Stocks Rise as Dubai Fears Ebb

By PETER A. MCKAY
DECEMBER 1, 2009, 5:08 P.M. ET

The Dow Jones Industrial Average rose to its highest close in nearly 14 months Tuesday as fears over the Dubai debt crisis continued to ebb, paving the way for a renewed push by U.S. investors into risky assets.

The Dow posted gains from the opening bell to the close, ending with a 126.74-point gain, up 1.2%, at 10471.58, its highest finish since Oct. 2, 2008. In two days, the blue-chip measure recouped all its losses from Friday, when it slid 154 points, reflecting investors' initial reaction to state-owned Dubai World's request to postpone payment on some $60 billion in debt.

Although the Dubai crisis served as a brief reminder of lingering risks within the global financial system, traders' attention the last few days returned to the U.S. economy. Most are optimistic that a gradual rebound is underway, with foreign trade and spending by businesses picking up some of the slack as catalysts for growth at a time when the job market remains weak.

"You can't stop a train that's being fueled by cheap money," as the Federal Reserve keeps its target interest rate near zero, said Mike Farr, president of the portfolio-management firm Farr, Miller & Washington. "We still have a day of reckoning ahead, but that day is being delayed for now."

Investors Tuesday sold dollars to buy stocks, commodities and other riskier assets. Gold futures, which often benefit from dollar weakness, rose $18 to $1,199.10 per ounce, a new record on the New York Mercantile Exchange's Comex division.

Tuesday's stock-market gains came despite data showing that U.S. factory activity unexpectedly grew at a slower pace in November. However, a forecasting gauge of housing-market activity climbed to its highest level in more than three years in October, and spending on construction in the U.S. in October rose, contrary to analysts' expectations for a decline.

The Nasdaq Composite Index rose 1.5%. The S&P 500 rose 1.2% to 1108.86, less than two points below its 2009 closing high last Wednesday, helped by gains of more than 1% in every sector except financials, which eked out a 0.1% rise.

Traders said financials suffered as some investors took money off the table after the sector's 2.7% rise Monday, which almost single-handedly pushed the broader S&P to a gain.

Financials were also held in check Tuesday by bearish remarks from J.P. Morgan Chase, which trimmed its earnings estimates for some large-cap banks. The Wall Street giant said some banks have been scaling back lending and boosting cash in the fourth quarter to cover lingering credit losses.

Of the firms for which J.P. Morgan cut its earnings forecasts, SunTrust Banks fell 1.8%, Regions Financial fell 1.4%, and Wells Fargo slipped 0.2%. Fifth Third Bancorp managed a 1% gain, while Bank of America was up 0.3%.

The stock-market began to rally late Monday as Dubai World said it was in constructive talks with banks to restructure $26 billion in debt. While that represents less than half the debt covered in the conglomerate's announcement last week, investors are increasingly confident that any pain from the company's struggles will be felt most acutely by firms in Britain and other countries, not the U.S.

"People aren't necessarily running for the hills anymore," said strategist Jane Caron, of Dwight Asset Management. "People are looking for places to get returns again, figuring they need to make money and they're not going to do that earning a few basis points in Treasurys."

Treasury prices slipped on Tuesday, with the two-year note off 1/32 to yield 0.675%. The 10-year note declined 22/32 to yield 3.277%.

The U.S. Dollar Index, which measures the greenback against a basket of six other currencies, recently was down 0.6%.

Oil futures rose for a second straight day, up $1.09 to $78.37 per barrel at Nymex. The broad Dow Jones-UBS Commodity Index was up 0.8%.‹

[DewDiligence]

Stocks Roll to 15-Month High

[Is Noriel Roubini still bearish? A better question is: Does anyone care?]

http://online.wsj.com/article/SB10001424052748704281204575002561307442590.html

›JANUARY 14, 2010, 4:44 P.M. ET
By PETER A. MCKAY And KRISTINA PETERSON

Investors placed their bets ahead of Intel's quarterly profit announcement, which beat analysts' expectations and sent a promising signal for the broader economy.

The Dow Jones Industrial Average rose 29.78 points, or 0.3%, to 10710.55, its highest close since Oct. 1, 2008. The blue-chip measure was helped by a 2.5% jump in component Intel.

After the closing bell, the chip giant announced a sharp increase in fourth-quarter earnings to 40 cents a share, handily beating Wall Street's consensus. Shortly after the announcement, Intel's shares were up more than 3% in after-hours trading .

The profits of Intel and other chip makers are often viewed as a barometer of spending on an array of devices that require computer chips, including equipment that businesses need to ramp up operations in the early stages of an economic recovery.

"They're a real bellwether for the market," said Ed Schreier, head of trading on the New York Stock Exchange floor for Deutsche Bank. "Barring anything else, I think we should have some carryover on this news" in the broader market Friday.

Dow component J.P. Morgan Chase, which is due to report before the opening bell on Friday, also posted a solid gain. The Wall Street giant firmed 1%, lending support to the broader financial sector.

Consumer stocks were weak after the Commerce Department reported an unexpected drop in U.S. retail sales in December from the previous month. Wal-Mart dropped 1.5%, while Walt Disney fell 0.9%.

The market has stalled since Alcoa's quarterly report marked a disappointing kick-off to the fourth-quarter earnings season on Monday. Some traders are increasingly worried that the market's overall profits may not be as strong as expected, while others are nervous that stocks are simply due for a pullback after 2009's big gains.

"When you look at the fact that we've had a 10-month rally with very little pullback, the markets are very ripe for one right now," said Randy Frederick, director of trading and derivatives at Charles Schwab & Co.

Mr. Frederick said recent trading in the Chicago Board Options Exchange's Volatility Index has suggested that an increasing number of big Wall Street firms are using options contracts to guard against a possible correction. He said bullish call options on the measure, which tends to move in the opposite direction of the stock market, have been much more active lately than bearish bets known as puts.

On Thursday, the VIX fell 1% to 17.68, while major stock indexes edged higher.

The tech-focused Nasdaq Composite Index rose 0.4% to 2316.14. The S&P 500 rose 0.2% to 1148.46, its eighth gain in the last nine sessions, led by a 0.8% gain in its health-care sector.

The category was helped by reports that Democrats had reached an agreement with unions over taxing high-end health plans. Bellwether Merck also extended its recent strong run, climbing 2.7% a day after Credit Suisse raised its investment rating on the stock.

The dollar strengthened against the euro but was lower against the yen. Crude oil futures were steady just below $80 per barrel, while gold futures edged higher. Treasurys climbed, with the 10-year note up 17/32 to yield 3.729%.‹

[DewDiligence]

Articles like this one from page-1 of today’s Boston Globe are
a good contrary indicator on the direction of the market. When
the market has become so scary that ordinary, reasonable people
prefer money-market funds paying 0.01% interest—and this is
deemed worthy of a front-page story in a major newspaper—the
chances are good that it’s a good time to be buying stocks. There
were myriad articles like this one near the bottom in March 2009.

http://www.boston.com/business/markets/articles/2010/06/30/tired_of_fluctuations_many_are_shedding_stocks/

›Tired of Fluctuations, Many Are Shedding Stocks

By Jenn Abelson
June 30, 2010

The stock market freefall last month, which wiped out $1 trillion in value in just minutes, proved to be Steve Weiser’s breaking point.

He sold off his entire portfolio of stocks — 25 years worth of investments for retirement and college savings — and put the cash into a money market account that is now earning 1 percent interest. It’s the second time in two years that Weiser has fled the market, and the 57-year-old architect has no plans to return anytime soon.

“The question for me was, ‘Oh, my God, is this going to happen again?’ ’’ said Weiser, who estimates that he saved $90,000 by removing his money from the market and avoiding the continuing losses of the past month. “It was just too hard to understand, so I jumped out. And I’m just sitting on the sidelines.’’

The wild gyrations of Wall Street and tumultuous world affairs have spooked millions of investors into going against the conventional wisdom: that staying the course during market fluctuations is the best long-term strategy. Investors are leaving the stock market in droves, and putting their money into bonds, gold, real estate, or — like Weiser — cold, hard cash. The conflicting economic indicators in the United States, the debt crisis in Europe, and the massive oil spill in the gulf create too much uncertainty, too much risk.

US stocks slid yesterday after reports of a sharp decline in consumer confidence added to jitters over the global economic outlook. The S&P 500 had its lowest closing price of the year, and the Dow Jones industrial average fell below 10,000, dropping 5.35 percent since the start of the year.

Investors pulled more than $16 billion from stock and bond mutual funds for the week ending May 26, the largest weekly outflow since December 2008. And in May, Americans made dramatic changes to their portfolios, including a 9.5 percentage point decrease in stocks, a 4.4 percentage point increase in cash, and a 5.1 percentage point jump in bonds, according to a survey by the American Association of Individual Investors.

“People are unbelievably frustrated and terrified,’’ said Fred Sears, a portfolio manager who gave a talk to a group of Boston area investors last month. “It’s terrifying for everyone — professionals and amateurs alike.’’

Sears also shook up his own portfolio, cutting his long-term investments in the stock market from 98 percent to 80 percent and shifting more money to cash and cash equivalents, such as money markets. During his talk, Sears heard tales from other exasperated investors who had left the market. Many financial advisers are encouraging clients to avoid making drastic changes and point to rebounds over the past year as proof of the long-term potential of staying in the market. Investors who put $10,000 in the market on Sept. 2, 2008, for example, would have only $5,539 if they sold their stocks when the market sank in March 2009. Investors who didn’t budge would have $8,904 today, according to an analysis provided by T. Rowe Price.

Still, people have been on edge, particularly since the May 6 “Flash Crash’’ when the Dow fell 998 points in a half hour, making it one of the most volatile periods in Wall Street history. Just between 2:30 and 3 p.m., the stock market lost about $1 trillion in value, and then recovered more than half of the loss. The precise cause of the dive is not known, and regulators are still investigating.

The next day, Haven Tyler of Jamaica Plain called her financial adviser, John Osbon, to make changes to her investments, including shifting 10 percent of her portfolio from stocks into other assets, such as gold, cash, and real estate. Tyler now has 70 percent of her portfolio invested in stocks, and any new funds are staying liquid or being used for renovations to her new home.

“I feel safer that way,’’ said Tyler, 43, who works for a design firm. “It’s been sheer terror watching your money go away and come back again and go away.’’

Like many investors, Tyler is feeling more uneasy about the economic recovery. Mixed signals continue to keep investors on high alert. For example, retailers reported a 1.2 percent decline in sales in May, the first drop since September, while consumer confidence rose to a new high during the recovery, according to a recent Thomson Reuters/University of Michigan survey.

“Fear is back,’’ said Osbon. “I’m sure people are wondering is this 2008 all over again. But jobs are rising and home prices have been up so we have to keep everything in perspective.’’

The exodus of investors has prompted some online brokers to step up promotions. TradeStation for the first time offered commission-free trades for 60 days to traders who open and fund an account by June 30. E*trade is offering 10 commission-free stock trades in 30 days.

But no promotion is going to lure back Kaiomarz Dotivala. The Waltham engineer sold the portfolio of stocks in his 401(k) in 2008 before the market plunged. As others saw retirement savings plummet, Dotivala has kept his cash in a money market account earning less than 1 percent interest. He recently borrowed half of those funds for a down payment on a house in Westford.

“I can give my daughter a better education and have her grow up in a better neighborhood,’’ said Dotivala, 43. “Investing in something more concrete is definitely a good idea.’’

The roller coaster ride on Wall Street lately has only reinforced Dotivala’s views that the market is being ruled by aggressive traders who are betting on stock prices to go down. “The real purpose of the stock market has been completely lost. It’s become a casino and betting game rather than a straight forward investment like it was before,’’ Dotivala said. “And I’m not a gambling kind of person.’’‹

[DewDiligence]

Factoid—the S&P 500 is up more than 100% from its low of 666.79 in Mar 2009. (Is Noriel Roubini still bearish?)

[DewDiligence]

Stocks Finish Best Week Since 2009

[The S&P 500 was +1.4% Friday and +5.6% for the week. My view of the broad market, FWIW, is outlined in the prologue of #msg-63883853.]

http://online.wsj.com/article/SB10001424052702304584004576419304160527710.html

›JULY 1, 2011, 5:57 P.M. ET
By STEVEN RUSSOLILLO

U.S. stocks notched their biggest weekly jump in two years, as investors pounced on fresh data suggesting the economy could be slogging its way out of its recent malaise.

The Dow Jones Industrial Average ended up up 168.43 points, or 1.4%, to 12582.77 on Friday, for a 5.4% gain for the week, its best performance on a percentage basis since July 2009. By points—the Dow tacked on 648.19 in five days—the Dow had its best week since November 2008.

Driving the gains was an easing in anxiety over the U.S. economy and Europe's debt troubles. On Friday, an update on the U.S. manufacturing sector showed brisk expansion in June, representing one of the month's first prominent readings on the economy.

The report was especially well-taken a day after a regional manufacturing survey of Chicago-area purchasing managers for June that also handily beat economists' expectations.

"This is a great indication that the manufacturing sector is turning around," said Peter Cardillo, chief market economist at Avalon Partners. "I expect manufacturing will take us out of the soft patch and lead economic growth in the second half of the year."

For months, a cascade of disappointing U.S. economic numbers had put investors in a sour mood. And in recent weeks, the sight of an increasingly chaotic European debt crisis added a hefty pinch of jitters to the global mix. Before this week, the Dow had declined in seven of its previous eight weekly runs.

Even after this week's surge, many investors warned that the economy, and Europe, are far from out of the woods. Big tests will come next week when the U.S. Labor Department releases non-farm payrolls for June. Statistics released over the past month have shown a soft labor market, leading some to worry the jobs number could be weak.

"Sentiment has rapidly changed, but the jobless situation is getting worse, not better," said Ben Halliburton, chief investment officer at Tradition Capital Management. "At this stage in the recovery, it makes you question whether there's actually a recovery taking place."

Beyond the economy, considerable uncertainty remains surrounding the long-term outlook for Greece and, closer to home, the Federal Reserve has just ended its bond-buying program, widely known as QE2, which pumped $600 billion into financial markets. Political wrangling over raising the government's debt ceiling is likely to heat up ahead of the Aug. 2 deadline set by the Treasury department.

"Over the next few months the market's going to face another period of angst related to the debt ceiling," Mr. Halliburton said. "Right now, the market doesn't care. But there's no easy way out. A lot of people are going to be mad with whatever decision is ultimately made."

Indeed, oil prices fell Friday, in part on weak manufacturing data from China. The price of the light, sweet crude-oil futures contract for August delivery fell 48 cents, or 0.5%, to $94.94 a barrel.

But for now, investors have reverted snapping up riskier assets like stocks and dumping their traditional safe havens like Treasury bonds.

The past week for Treasurys was the mirror opposite of that for stocks. The 10-year note had one of its steepest weekly declines in two years, giving ammunition to those who say the months-long bull run for government debt is coming to an end.

The 10-year yield, which rises as prices fall, shot up by 0.33 percentage point, the sharpest weekly rise since August 2009. In late afternoon New York trading on Friday, it was at 3.199%, its highest yield since May 12.

As the move rolled through the week, Goldman Sachs on Thursday declared the recent rally in bonds over. That view was echoed by several market participants. Others are more cautious, describing the selloff as little more than a correction.

"I don't think this is the beginning of a bear market," said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading in New York at Deutsche Bank's private-wealth-management unit. He said yields will stay where they are until the economy strengthens, which could take a couple more months.

Friday's bond-market selloff came on light volume ahead of the long holiday weekend. Market moves on light volume are typically considered less telling than moves that are confirmed by heavy trading.

In the stock market, trading also was less than robust. Some 3.42 billion shares changed hands in New York Stock Exchange composite volume, roughly 12.5% below the average June volume.

Shares of Eastman Kodak skidded 51 cents, or 14%, to $3.07, after the U.S. International Trade Commission ruled against the company in its patent dispute with Apple and Research in Motion. Apple shares rose 7.59, or 2.3%, to 343.26, while Research in Motion rose 8 cents, or 0.3%, to 28.93.

Dendreon rose 1.96, or 5%, to 41.40, after the drug maker said its Provenge prostate-cancer treatment received approval to be covered by Medicare.

Apollo Group's fiscal third-quarter adjusted profit fell less-than-expected as expenses for the for-profit college operator declined. Shares rose 2.78, or 6.4%, to 46.46.

Activist investor Carl Icahn reported a 9.51% stake in specialty-vehicle maker Oshkosh and said he intends to seek out management to discuss ways to enhance shareholder value. Oshkosh shares jumped 4.01, or 14%, to 32.95.

Darden Restaurants' fiscal fourth-quarter earnings rose 19% and the casual-dining chain gave strong earnings and revenue guidance for fiscal 2012. Shares rose 3.03, or 6.1%, to 52.79.‹

[DewDiligence]

Yes, WSJ, I do remember—but I don’t need to…

http://online.wsj.com/news/articles/SB10001424052702304732804579423350714558572

Lessons From the Bull Market
By Jason Zweig, Joe Light, and Liam Pleven
March 8, 2014

Do you remember how you felt about the stock market on March 9, 2009?

It’s not a strain to remember how I felt in Mar 2009 because iHub has a record of it; from #msg-35980601:

Today may be the proverbial day of capitulation when hordes of people decide they don’t want to own any stocks and sell everything.

If you have dry powder, you can buy shares of myriad fine companies at prices that haven’t been seen in a long, long time.

p.s. The body of the WSJ article referenced above is vacuous, IMO.

[DewDiligence]

Shameless self-promotion (which I do every year at this time):

#msg-35980601

[DewDiligence]

On each anniversary of the 2009 bear-market low, I shamelessly link to this post:

#msg-35980601

[DewDiligence]

S&P 500* closes at all-time high.

*Not adjusted for inflation or reinvested dividends.