Sunday, May 10, 2009

The WSJ crys "wolf" again

We have another article from the WSJ tonite that you need to ignore. Now two months ago, the WSJ was crying Dow 5000. Remember this headline? How much money did that cost you?

Dow 5000? There's a Case for It

Despite Friday's small gain, the Dow Jones Industrial Average marked its fourth consecutive week of losses as it tumbled through the 7000-point mark and spiraled to new 12-year lows. The Standard & Poor's 500-stock index is trading below 700 for the first time since 1996.

As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched.

Last month, the WSJ called this a bear market rally, like the one we had in November. Anyone listen to that? How much money did that cost you?

It's Starting To Look a Lot like November.

The recent stock-market rally is turning heads. Why, there hasn't been anything like it since at least...November.

..Until this past Thursday, November's rally was bigger, with the S&P 500 up 21% in 17 days, compared with 20% for the current bounce. The earlier surge carried through to early January, but then fell off a cliff to hit 12-year low..

But this rally's scaffolding includes wishful thinking, too. It was launched by word that some big banks were profitable in January and February. Two months do not a quarter make, and banks indicated conditions got tougher in March.

While this bounce might not mirror November's, it still has the hallmarks of a bear-market rally.

Tonite the WSJ has a new headline-that stocks are no longer cheap. Even the WSJ is getting chastened. Now instead of telling us that the Dow is heading to 5,000, or that this is a bear market rally, they now tell us that stocks are no longer cheap.

What happens when we have 4% growth in Q3? Is that in their calculations of cheapness?

Think about that if you want to listen to the WSJ version of crying wolf!

By Most Measures, Stocks are No Longer Cheap

The outlook for stocks has brightened but, thanks to the big rally of the past two months, the market is no longer a bargain.

By many measures, stocks are still on the cheaper side of the ledger. But they are approaching levels that bring them closer to long-term averages, making them neither a deal nor expensive.

As a result, valuation has shifted from being a talking point of the bulls to one used by those bearish on the near-term outlook. And even many of those who think the market has hit bottom -- a rapidly growing group -- say valuations now suggest investors should tread more carefully.

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