Historic 8 Up-Sessions In A Row For F T S E

[Realistbear]

FTSE 100 5268.97+0.29%

8 sessions in a row

They say its due to more retail spending which is said to be a sign that the worst has passed and people are now willing to start spending again as the future looks rosy. In other words, the people simply do not believe the recent economic news which does not suggest the good times are back.

http://uk.finance.yahoo.com/news/ftse-seen-opening-higher-reuters_molt-27784efdae74.html;_ylt=Aj00MSYHNkajXGJVuoyo94PBXGwF;_ylu=X3oDMTE2dnZubzlpBHBvcwMxMgRzZWMDdG9wc3RvcmllcwRzbGsDZnRzZXNlZW5vcGVu?x=0

Most Asian stocks rose on Friday, encouraged by the late rebound on Wall Street, while the euro hovered near 3-week highs against the dollar after a strong investor response to Spanish bond auctions.

BP 365.20 5.50 +1.53%

Edited June 18, 2010 by Realistbear

[interestrateripoff]

That's because it's all fix and it's contained.

[stu531]

I'm utterly amazed.

I have friends in the public sector who I *know* are about to face devastation. I also have colleagues working in the private sector who have told me that, over the half-year, things were looking up, but in the last month, things work-wise have really started to dry up.

This is anecdotal, but I'm just surprised that this idea of 'expansion' is so rife at the minute. Especially when there is so much bad news floating about in the media.

[Deckard]

Herd thinking, everyone seems to just be following momentum at the mo.

I guess that works well for day traders, with their finger always on the trigger, ready to reverse when everyone else does.

Me, I'm not touching it, thank you

[togger]

A wall of wedge is going into pensions by those that think they will lose their 40% tax relief.

It's in the news somewhere....

[Confounded]

I'm utterly amazed.

I have friends in the public sector who I *know* are about to face devastation. I also have colleagues working in the private sector who have told me that, over the half-year, things were looking up, but in the last month, things work-wise have really started to dry up.

This is anecdotal, but I'm just surprised that this idea of 'expansion' is so rife at the minute. Especially when there is so much bad news floating about in the media.

Have you considered the fact the the stock market has become more of a central bank sentiment tool rather than a fully functioning and transparent market? Consumer confidence rises in line with the equity market, consumers are needed for any sort of recovery.

In a zero interest environment they faced a huge challenge in preventing asset prices declining and worsening the economic situation requiring further bailouts or major failures. When asset prices are overvalued and people expect declines (based on the graph below US equities did not even fall to fair value at their March 09 lows) even zero percent interest rate does not offset the loss in capital so people do not buy.

So combined with zirp central banks around the World agreed after the March 09 G20 that they would put a floor under asset prices at all cost. The relative peanuts required to manipulate the US stock market compared to the continued bailouts was the easiest political choice. So the US the took the role of pumping up the global equity markets (the World market essentially track the DOW/S&P). The Chinese took on the baton of raising commodity prices to stave of the massive deflation caused by the first round of commodity and equity corrections. Zirp and rising asset prices combined was/is hoped sufficient to build confidence and keep the people buying into the ponzi.

I have a friend who is heavily into BTL (all bought in the bubble phase) and is into his spread betting, for 3 years I have been bearish and he has always been bullish, the last day of falls recorded in this recent correction he said he had gone bearish and was wondering when this would all end. Traders argue when everyone is bearish it is time to get bullish, my belief is the US stepped back into the equity markets because of the fear spreading throughout Europe. The DOW breached 10K conclusively and there was no support until a long way down, Continuous rise for the DOW for last 8 days and suddenly the World feels so much better again This is despite the last few weeks the US leading indicators are rolling over and suggesting the US stimulus is wearing off and their economy is deteriorating again.

[Guest Noodle]

It's what happens when governments print money.

Turn the QE tap off and get back to me in 6 months.

[deflation]

What's historic about it? There were 11 successive rises in July 2009, somehow!

http://www.telegraph.co.uk/finance/markets/marketreport/5920035/FTSE-poised-to-break-record-winning-streak.html

[The Masked Tulip]

I think it is simply that cash has no where else to go.

[Realistbear]

What's historic about it? There were 11 successive rises in July 2009, somehow!

http://www.telegraph.co.uk/finance/markets/marketreport/5920035/FTSE-poised-to-break-record-winning-streak.html

I agree, 8 days is not a record. However, we are seeing unusual euphoria against a backdrop that should be telling people its a time to SELL and not buy. Recent economy indicators have been awful--sovereign debt issues were threatening last year but this year its here.

I think the above post from CONFOUNDED starts to get at the truth. Manipulation it must be because everyone I speak to about stocks are as bearish as I am.

[R K]

"It's the dollar stupid!"

Dollar getting thrashed.

Cable 1.42 to 1.49.

Didn't RB mention it?

Manipulation it must be because everyone I speak to about stocks are as bearish as I am.

You are our much loved contra-indicator RB.

Edited June 18, 2010 by Red Karma

[crouch]

I think it is simply that cash has no where else to go.

More like it plus the fact that very little of the FTSE is exposed to the UK economy; most of the earnings which support it are generated abroad.

[Realistbear]

"It's the dollar stupid!"

Dollar getting thrashed.

Cable 1.42 to 1.49.

Didn't RB mention it?

You are our much loved contra-indicator RB.

CABLE bottomed at 1.37 which demonstrates a powerful recovery to 1.48. But at what point do you measure your forecast? Twenty years from now the $ may be the one world currency or it may be worth 1.12 opr any number you care to imagine. The fact is that Sterling did somewhat correct vs. its 5 year high at 2.11.

Dollar is doing okay vs. the Pound which was at 2.11 when the goldbugs were forecasting the demise of the US. The Dollar is up against the Euro at a current rate of 1.23-4 compared with 1.61 a year or so ago.

A friend who is on the FOREX game said that my indicators for the Euro and Sterling this year where about as accurate as it could get given that the forecast was made last Crimbo when there were still a lot of bulls in the market for the Euroland and UK currencies. If you missed my multi-national stock recommendations around Crimbo 2008 you missed a big rally--especially for Honeywell which would have netted you over 100% return in a year ($23-$47) provided you sold this year before the next big dip.

I think I am running at about 87% forecast accuracy at the moment and Gold is next! Are you still holding any gold BTW?

I believe the housing market will crash another 30-50% in this country--that may be your indicator to stock up on BTLs.

Edited June 18, 2010 by Realistbear

[Realistbear]

More like it plus the fact that very little of the FTSE is exposed to the UK economy; most of the earnings which support it are generated abroad.

Unless its Asia the rest of the world is not doing so well in the post-financial collapse.

[Realistbear]

Ah! Now I understand the euphoria---its more debt creation in the EZ that is giving the markets a boost. Silly me, how could I miss such a thing--things really have turned around as bond are flying off the shelves and that must mean less debt right?

Better get online to my broker account and buy buy buy!

http://uk.finance.yahoo.com/news/asian-markets-edge-up-on-spanish-bond-sale-afp-17842ec9275e.html?x=0

Asian markets edge up on increasing Spanish debt (bond sale)

Danny "Daniel" McCord, 10:09, Friday 18 June 2010

A successful bond sale by the Spanish government lifted confidence in Asian trade on Friday, with most markets posting gains, although sentiment was tempered by disappointing US data.

The upbeat news out of Spain boosted the euro, while dealers also welcomed the fact that European leaders had agreed to go public with the results of stress tests on their banks.

But hang on, what this about bad news in the US tempering the markets?

Confounded, dazed and confused.

[Confounded]

More like it plus the fact that very little of the FTSE is exposed to the UK economy; most of the earnings which support it are generated abroad.

This is always an interesting argument and often rolled out in opposition to people amazement that the FTSE marches on despite the dire state of the UK economy. The reality is this is a global crises and the US economy is rolling over and the Eurozone is very unlikely to escape another recession in the next 12 month. China's mega stimulus has come to an end and even their stock market is down 30% from it's July 09 peak and over 50% down from its 07 peak.

The simple fact is if the US markets rise so do the rest of the Western markets. A few billion pumped into the DOW/S&P can move the markets massively, especially if timed for when a lot of shorts are in the market who then get forced to cover.

To form this recovery rally on the 10th June the US markets, in the face of still deteriorating news and after the DOW had finished perilously below the physiological 10K mark, they pumped up the US future in the night pushing the DOW back over 10k. This firmed up the European markets. When the US opened for trading above the DOW 10K region set by the futures, then GS came in with a massive $500,0000,0000 buy order for the S&P about 20 mins in that launched the US market well clear of the 10K region. See here for more

Now whether this manipulation is for the greater good in trying to secure financial stability or if the big banks have become the market and they call the shots purely for profit I do not know but this is not the heard trading this is big players deciding on the direction of the markets.

Edited June 18, 2010 by Confounded

[R K]

This is always an interesting argument and often rolled out in opposition to people amazement that the FTSE marches on despite the dire state of the UK economy. The reality is this is a global crises and the US economy is rolling over and the Eurozone is very unlikely to escape another recession in the next 12 month. China's mega stimulus has come to an end and even their stock market is down 30% from it's July 09 peak and over 50% down from its 07 peak.

The simple fact is if the US markets rise so do the rest of the Western markets. A few billion pumped into the DOW/S&P can move the markets massively, especially if timed for when a lot of shorts are in the market who then get forced to cover.

To form this recovery rally on the 10th June the US markets, in the face of still deteriorating news and after the DOW had finished perilously below the physiological 10K mark, they pumped up the US future in the night pushing the DOW back over 10k. This firmed up the European markets. When the US opened for trading above the DOW 10K region set by the futures, then GS came in with a massive $500,0000,0000 buy order for the S&P about 20 mins in that launched the US market well clear of the 10K region. See here for more

Now whether this manipulation is for the greater good in trying to secure financial stability or if the big banks have become the market and they call the shots purely for profit I do not know but this is not the heard trading this is big players deciding on the direction of the markets.

Which makes perfect sense after one of the biggest capitulation days in history

Or zoomed out to a 2 yr view to put it in better context.........

Edited June 18, 2010 by Red Karma

[Confounded]

Which makes perfect sense after one of the biggest capitulation days in history

Or zoomed out to a 2 yr view to put it in better context.........

Can you explain, how is the capitulation measured?

Volume seemed pretty ordinary the day before the pump.

[Confounded]

Confounded,

Do you see a correction this year in the FTSE going forward any chance?

I assume because of what you have written you'll in the correction camp by at least 20% when the phoney recovery shows itself to be exactly that.

As in the earlier chart I posted stocks have been significantly cheaper than they are now, at some points as much as 80% cheaper, so I believe stocks will fall and potentially by this amount. As with all the discussions on this board does this happen in real or nominal terms? I can not give the answer to that.

My gut felling is we will see the FTSE in the 2000's and the Dow in the 4000's with inflation doing the rest.

[R K]

Can you explain, how is the capitulation measured?

Volume seemed pretty ordinary the day before the pump.

Well 'capitulation' is my word/interpretation here.

Those charts are showing down volume relative to up volume. But you'll see similar things on other breadth and sentiment charts.

It coincided of course with similar currency events i.e. the Euro/USD low of 1.18nn, the Euro/JPY low on 6th June and so on. So the dollar/JPY switched from being the anti-Euro safe haven at that point as money flowed back into the euro and the 'risk' trades.

Whether that will continue and for how long is anyone's 'guess'. But that appears to be what happened to me. So it's perfectly logical for GS (or anyone else) to be heavy long at that time (if true, and there's no mention of where/how they hedged that in the ZH article, which I imagine they will have done). Whether they're causing the moves in all markets or whether they're participating is moot. Does it matter who all the buyers and sellers are at any point in time and what their motivations may be? Even if it were possible to dissect every trade around the globe to find out?

Edited June 18, 2010 by Red Karma

[newbie]

It's the feel-good factor generated by England's awesome performance in the first match of the World Cup.

[Confounded]

Well 'capitulation' is my word/interpretation here.

Those charts are showing down volume relative to up volume. But you'll see similar things on other breadth and sentiment charts.

It coincided of course with similar currency events i.e. the Euro/USD low of 1.18nn, the Euro/JPY low on 6th June and so on. So the dollar/JPY switched from being the anti-Euro safe haven at that point as money flowed back into the euro and the 'risk' trades.

Whether that will continue and for how long is anyone's 'guess'. But that appears to be what happened to me. So it's perfectly logical for GS (or anyone else) to be heavy long at that time (if true, and there's no mention of where/how they hedged that in the ZH article, which I imagine they will have done). Whether they're causing the moves in all markets or whether they're participating is moot. Does it matter who all the buyers and sellers are at any point in time and what their motivations may be? Even if it were possible to dissect every trade around the globe to find out?

Thanks for the explanation, on a yearly bases it really puts it into context, it seems a massively out of context given the size of the sell off. Did you trade on it?

I think it does matter who is doing the buying and selling when they become large enough to move the markets at will. In the early part of the rally in 09 day in day out 20% of the buying was being done by GS and JPM alone. Their strong buying moved the markets up and was the reason for there stella trading profits as they redistributed these shares to mutual funds and the general public over the summer and Autumn last year. These people are now holding the bag while the bankers have made out like bandits.

The Government is happy because they can point to the markets and say look we are recovering, the banks are making money to offset their losses, it is what congress would call a win win. However as more people realise these big players control the markets they will either chose to step out of the market or learn the hard way and contribute to the bankers bonuses. It does not make for a healthy market and certainly not one you can use any judgement on about when to enter and when to exit.

Edited June 18, 2010 by Confounded