Another Rational Day in the Stock Market

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April retail sales growth comes in lower than expected, a decline of 0.2% vs. market expectations of growth of 0.3-0.4%.

Inflation at the wholesale level comes in higher than expected, at 0.7% vs. market expectations of 0.5-0.7%.

Bad news for GDP (consumption is 71% of GDP) and bad news for consumers (that inflation is running hot, reducing their purchasing power).

Of course, the stock market goes up. Hilarious.

[LookoutBelow]

Dont worry your pretty little head there JG….Me and the boyz over at the PPT have EVERYTHING under control……

Love and Kisses,

B. Bernanke

Were gassing up the helicopter fleet right now

[(former)FormerSanDiegan]

Don’t worry jg, your long-awaited recession/ zero growth period is but a few months away from being realized.

[Ash Housewares]

Speaking of rationality in the stock market, there is a great article on MSN today on this topic. Basically what it says is that the bears are technically correct, but they’re still taking it in the pants because they overestimate the rationality of Wall Street. Here’s the link:
http://articles.moneycentral.msn.com/Investing/JubaksJournal/ForBearsBeingRightStillHurts.aspx

[HereWeGo]

I’m starting to believe the premise that, due to buybacks and M&A, coupled with the growth in global money supply, there’s too much capital chasing too few equities. I thought for sure this mini correction would last a couple of days, at least.

Good ol’ Ritholtz called a 5% downturn. Nice one, Barry.

[PD]

I thought we were going to see a correction today when things started going sideways overseas last night. Sigh…
It seems impossible that things could keep going like this. Each day I grow more and more amazed.

[GoUSC]

The irrationality in the market will depress you if you follow it…I stopped.

[paranoid]

you guys still don’t get it.
Do you know why the market keeps rising? that’s because there are too many bears like you out there. Don’t you believe me? look at the short ratio of the NYSE which is now at record high. The margin is also at record high, which is however mis-interpreted by the media as over-the-top bullish sentiment in the market. But such an interpretation is totally wrong, because when you short a stock, that is also counted in the margin account. When there are too many bears, the only way is for the market to continue to go up.

Since early march, I have warned several times over this message board that the chance is higher for Dow to go to 14000 and S&P500 to 1600 before the end of this summer, than going down. Nobody seems to hear my message. I don’t blame you. In fact for my own fortune, the more bears are ther, the better, because I have been FULLY invested. I’ll start to really worry when you bears throw in the towel, and cover all your short positions. That will be the time when I liquidate all my long positions.

BTW I’m bearish on housing since 2005.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Any day now I keep telling myself, I am going to buy some QID
(QQQQ ultra-short) shares, Luckily I just have not got up the nerve to pull the trigger.

But any day now !!!

I only have a small part of my bank roll in trading accounts, the rest is in 6% FDIC CD’s waiting for that North County McMansion (Any day Now !!!).

OK maybe any month now !! (year maybe ahhhhhhqqqqa).

[Anonymous]

PD, I, too, saw a bunch of red on this chart last night (though the declines were only 1-2%) and thought that we might have a ‘fun’ morning on our market:

http://online.wsj.com/mdc/public/page/mdc_international.html?mod=mdc_h_intlsctnhd

paranoia, I hear the explanations from you and Chris J. on the short-term stops due to shorts (I don’t understand it, but acknowledge it). Your explanation may hold on a day-to-day basis. But, once enough folks say, ‘Wow, the economy is headed for a rough patch,’ and sell, I assume that they’ll overwhelm any resistance from shorts.

I’m quite confident and comfortable being on the opposite side of you on this. Given that I’ve been out of the market since the beginning of ’05 (in gold mining stocks, which killed the broader market, then a double inverse fund since March), I’m losing nothing but the time value of 5% on my money. No problem, ’cause I’m gonna make it up big time when the broader market and gold fall later this year, and I get back 100% into gold.

[poorgradstudent]

The article I read said that the PPI came in at expectations (0.7%), which was lower than last month (1.0%).

“”It looks like inflation is very tamed,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group, adding that the PPI bodes well for next week’s consumer price index and makes a rate increase appear less likely.”

I was pretty surprised to see the market gain back almost all of Thursday’s losses. I guess it was the combination of the mild inflation numbers and a bounce back effect.

It looks like inflation may be slowing as the economy slows. If it does, there could be a rate cut, which the market always loves, a little too much.

[tech_junkie]

i don’t know about the rationality about things. But considering in the last two month I’ve my returns have been equal to my base salary, I don’t care how irrationale things are. (Though today was a day to take some profit. Hope I’m not wrong and the thing keeps going up). I never thought financial markets behaved rationally to begin with.

Home prices falling 20-30%??..Pffff… At this point…I don’t care. I’m not going to dwell on any ands, if’s, buts. if it happens, great…I’m not going to dwell on this at this point when there’s money to be made elsewhere. I’m sure though that when the stock prices have become so inflated and so irrationale, we’ll see predictions on a big crash there coming out too.

It’s sort of interesting if you look at your retail reports.
Compare your low end retailers like walmart with higher end retailers like saks. It sort of tells you the state of the economy.

Walmart -3.5%
Target -6%
JC Penney Co. -4.7 %

Nordstrom Inc. +3.1%
Saks +11.7%
Costco (neither high end or low end…Although trying to appeal to upper end these days)…7%

Conclusion….The rich keep getting richer, the poor keep getting poorer.

[barnaby33]

Until the poor get out their guns and say, “we ain’t gonna take it any more!”

Josh

[Chris Scoreboard Johnston]

Chris Johnston

The Market is always right, if you are not in sync with it, you are the one who is wrong. Paranoid is in agreement with me, and I have also tried often to convince folks of this bull move starting with the mid-term elections.

The trend is up and the commercials are long, stop fighting this. I am trying to remember the last thread that actually had a positive outcome on something discussed. Many here have such a view that everything has to come crashing down, they miss opportunities to make profits.

My favorite quote from another thread is the suckers rally. I am a professional trader, and I can tell you that a 1500 point rally in the DOW is not a suckers rally. I bet you would call a 1500 pt fall a crash, so this must be a real bull market by that same definition.

[HereWeGo]

“The Market is always right, if you are not in sync with it, you are the one who is wrong. ”

Yup.

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