“Is this the real thing, or just another Bear Market rally? So far, we’ve had 4 runs of about 20% each.” –
FN: Even as the market moved higher, the Put / Call Ratio has started moving in favor of puts. When coming off extreme levels such as these, this can signal an intermediate turning point.
83.57% of stocks on the NYSE are now above their 50 day moving averages. This is a truly ridiculous level for a Bear market and has always resulted in significant pull backs.
Read the following very carefully… notice the ‘leaders’ of this rally.
Russell 2000 Rising 36% Flashes Warning for S&P Rally (Update1): “
The Russell 2000 Index’s record one-month gain is sending danger signals to investors who remember how similar rallies in U.S. stocks came to an end.
The gauge of companies with a median value of $301 million is beating the Standard & Poor’s 500 Index, where stocks have an average market value of $6.5 billion, by 9.8 percentage points.
Gains in the Russell 2000 are being led by an 11-fold jump in Spansion Inc., a bankrupt chipmaker, and a sevenfold rise for Hayes Lemmerz International Inc., a wheel manufacturer that hasn’t had a profit since 2006.
While small-caps tend to lead the way out of bear markets, when they have outpaced larger stocks by this much,
both indexes erased gains and fell, according to data compiled by Birinyi Associates Inc.
Increased trading and ratios of advancing to falling stocks have also risen to levels that preceded declines, boosting investor concerns that the S&P 500’s 27 percent advance since March 9 will end the same way as the 24 percent rally that fizzled in January.
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This move is too explosive to be sustainable,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $60 billion. “
None of the structural underpinnings of the market have really changed. It’s going to be a multiyear healing process.”
Profit Slump
Bank losses approaching $1.3 trillion spurred the first simultaneous recessions in the U.S., Europe and Japan since World War II last year, pushing the benchmark gauge for U.S. equities down as much as 57 percent from its October 2007 record.
