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The Dow is up 2.16% on the day. For real or Dead Cat Bounce?

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tekisui Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:50 PM
Original message
The Dow is up 2.16% on the day. For real or Dead Cat Bounce?
It has recovered to where it was before the first dive Monday morning. Has it turned it around, or just for now?

It is still down 10% for January.

http://finance.google.com/finance?cid=983582&client=news
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aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:51 PM
Response to Original message
1. Dead cat.
Nothing happening to be happy about.
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tekisui Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:55 PM
Response to Reply #1
4. Didn't think so.
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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 08:22 PM
Response to Reply #1
13. My feeling, too
This economy is unsound and unsustainable.

The general trend will be down until we get rid of the GOP and their incredibly bad management.
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:52 PM
Response to Original message
2. Some think it's due to the rumored government bail-out of bond insurers,
the insurers of all that hopeless subprime CDO shit:

http://bloomberg.com/apps/news?pid=20601087&sid=aS4MS1THQ.Zk&refer=home
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Taverner Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:54 PM
Response to Original message
3. This is expected behavior
In fact, you can almost always make a few bucks off of a Stock Market Crash. Buy a bunch of stock x right after it crashes, then sell it within a few hours or days.

I like the dead cat analogy

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Extend a Hand Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:58 PM
Response to Original message
5. My theory is....
The PPT doesn't want the market closing down six days in a row. They are trying to jump-start some upward momentum.

I'm betting they fail and that futures go much lower after close.
Dead cat bounce.
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tekisui Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 03:59 PM
Response to Reply #5
6. It does look like it is all-in for the close.
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tekisui Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 04:00 PM
Response to Reply #5
7. Can you explain to me what the PPT is?
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frylock Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 04:01 PM
Response to Reply #7
8. plunge protection team
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tekisui Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 04:01 PM
Response to Reply #8
9. ahh. thanks.
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CGowen Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 06:22 PM
Response to Reply #7
18. Founded after the (1987 Black Monday) aka "President's Working Group on Financial Markets"
Edited on Thu Jan-24-08 06:24 PM by CGowen

...

Nick Brady got the job he presently occupies by heading up a study of the October, 1987 stock market crash, the results of which Brady announced on a cold Friday afternoon in January, 1988, just after the New York stock market had taken another 150 point dive.

The study of the October, 1988 "market break" was produced by a group of Wall Street and Treasury insiders billed as the "Presidential Task Force on Market Mechanisms." At the center of the report's attention was the relation between the New York Stock Exchange, American Stock Exchange, and NASDAC over-the-counter stock trading, on the one hand, and the future, options, and index trading carried on at the Chicago Board of Trade, Chicago Board Options Exchange, and Chicago Mercantile Exchange. The Brady group examined the impact of program trading, index arbitrage and portfolio insurance strategies on the behavior of the markets that led to the crash. The Brady report recommended the centralization of all market oversight in a single federal agency, the unification of clearing systems, consistent margins, and the installation of circuit breaker mechanisms. That, at least, was the public content of the report.

The real purpose of the Brady report was to create a series of drugged and manipulated markets using funds from the Federal Reserve and other sources. The Brady group realized that if the Chicago futures price of a stock or stock index could be artifically inflated, this would be of great assistance in propping up the value of the underlying stock in New York. The Brady group focussed on the Major Market Index of 20 stock futures traded on the Chicago Board of Trade, which roughly corresponded to the principal stocks of the Dow Jones Industrial Average. As long as the MMI was trading at a higher price than the DJIA, the program traders and index arbitrageurs would tend to sell the MMI and buy the underlying stock in New York in order to lock in their stockjobbing profits. The great advantage of this system was first of all that some tens of millions of dollars in Chicago could generate some hundreds of millions of dollars of demand in New York. In addition, the margin requirements for borrowing money for use to buy futures in Chicago were much less stringent than the requirements for margin buying of stocks in New York. Liquidity for this operation could be drawn from banks and other institutions loyal to the Bush-Baker-Brady power cartel, with full backup and assistance from the district banks of the Federal Reserve.

The Brady "drugged market" mechanisms, with the refinements they have acquired since 1988, are a key factor behind the Dow Jones Industrials' seeming defiance of the law of gravity in attainting a new all time high well above the 3000 mark during 1991.

...


http://www.tarpley.net/bush19.htm ">George Bush: The Unauthorized Biography 1992 Chapter 19






Bush convenes Plunge Protection Team

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:18am GMT 11/01/2008


Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.

On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash.

It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry "short" traders in the hottest of oils.


The team is led by Treasury chief Hank Paulson, ex-Goldman Sachs, a man with a nose for market psychology, and includes Fed chairman Ben Bernanke and the key exchange regulators.


....

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2008/01/07/ccview107.xml
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 09:25 PM
Response to Reply #18
20. "It appears to have powers..."
Got a chuckle out of that.
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CGowen Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-25-08 09:10 AM
Response to Reply #20
21. With superheroes like "Hanky Panky" Paulson & "Helicopter" Ben everything is possible ... n/t
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bullimiami Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 04:07 PM
Response to Original message
10. the markets are psycho like the government.
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gravity Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 04:23 PM
Response to Reply #10
11. The best explanation yet
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sendero Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-23-08 05:47 PM
Response to Original message
12. the market..
Edited on Wed Jan-23-08 05:48 PM by sendero
... (Dow industrials) was down 300 points,then slowly made its way up to -100, then in the last hour took off.

I've seen this last hour stuff many times, it looks awfully fishy to me.

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Celebration Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 01:06 AM
Response to Original message
14. The market was way oversold
This wasn't unexpected at all. I think the market is going to be volatile for a week or so. It may climb some, but it will be lower in the fall than it is now.

Haha. That is just a guess. If any of us "knew" we could make a ton of money.
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Lasher Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 10:04 AM
Response to Reply #14
16. I agree there will be somewhat of a recovery but it will be worse in the fall.
But I call my prediction a 'forecast'. Exactly the same thing as 'guess' but it sounds better. :P
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nightrider767 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-26-08 12:21 AM
Response to Reply #14
22. Check Market Fundamentals
Everything is down. This market won't make a recovery till we make some fundamental changes in our economy.

Don't hold your breath.

The market will rally to sucker more money in...
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Speck Tater Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 02:42 AM
Response to Original message
15. Nothing the government can do
Edited on Thu Jan-24-08 02:44 AM by fiziwig
... can filter into the real economy to effect anything real in such a short span of time. The stock market is running on pure emotion right now. Day to day fluctuations are driven by speculators, not investors. Give speculators a happy pill in the morning and they buy like crazy. Give them a bitter pill and they sell like crazy. Right now the stock market has lost its connection with reality, and is just running wild, which means lots of crazy volatility. Expect many ups and downs in the days and weeks ahead. But eventually, when reality catches up, its going to come crashing down by 30% to 50%.

on edit: Disclaimer: I am not a stock market expert, although I did play one in a high school play 45 years ago.
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ramapo Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-24-08 11:03 AM
Response to Reply #15
17. Not a sign of investment
Investment is putting money towards infrastructure and the future. Healthy investments would be made in the United States. That is not the stock market.

The stock market has little to do with investment, especially during the more volatile periods. The market, and media, are manic depressive, swinging from fear and dismay to happy days are here again.

This is prime time for speculators who can make (and lose) a lot of money quickly.

The hourly market reports have nothing to do with the fact that the United States has divested itself of much of its manufacturing capacity, and is deep in debt at all levels from the household through federal government and thus is not in control of its finances.

The country is loath to invest in long-term infrastructure that would be beneficial to society such as mass transit, sustainable development, clean energy and the like.

The economy is based upon massive defense spending, borrowing, low-wage services and consumer purchases. It is the latter that especially must be sustained at all costs. This spending has little long-term benefit but makes everybody feel better.

There is a wish and magical belief that growth can continue forever. Inflation is but a minor concern despite ever increasing costs across the board. Debt is dismissed as ok as it is judged to be an "acceptable" percentage of GDP.

It is really quite amazing that the charade has become almost self-perpetuating. Reality will catch up at some point. It might be tomorrow or decades in the future. It will be "interesting" to watch this play out.

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crazymans economics Donating Member (77 posts) Send PM | Profile | Ignore Thu Jan-24-08 08:19 PM
Response to Reply #17
19. The markets love this volatility...
...because it creates motion, and motion creates fees and commissions, taking money out of the pockets of investors and putting it in the pockets of the Fat Cats.
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-28-08 03:22 PM
Response to Reply #19
24. It is a cross between...
the dead cat bounce and a pump and dump. It is going up in anticipation of the FED announcement as to weither they will have a rate cut.

And I agree with the suggestion that it will be 10K by the end of the year. Check the Stock Watch Thread for our "Turn Back The Hands Of Time" pool . We are guessing the day that the stocks drop down to what they were when Bush took office. I'll put it up this week. March, Sept, and Oct seem to be the fav months.
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Xenotime Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-28-08 01:38 AM
Response to Original message
23. You will see below 10000 before the year is up.
Unless you are ultra rich, you can kiss any retirement goodbye.
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dmallind Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-28-08 04:44 PM
Response to Original message
25. The "dead catters" would be more credible if they had not
being selling doom and gllom for the last god knows how many months or years. This cat is bouncing a damn lot of times for a dead'un.

Occam tells me this is simply volatility, and that 200pt loss days are no more hard evidence of underlying trends than 200pt gain days.

My guess is the DJIA will simply bob around the high elevens to mid twelves until election time. Assuming the Dem wins, we should pick up a bit over the next year but I'd be surprised if we see over 14 or under 10 in the next 2 years at least.

Things could change of course, but the doom and gloomers always forget to factor in the millions of DCA investors via 401k funds and the trillions sitting in China waiting for investment opportunities.
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