Thursday, August 13, 2009

The market spanks another bear

A great blog for information is Mish Shedlock's but like most bears, he's been fighting this rally, although he covered a bunch of shorts when the market collapsed.

Today he had this to say on his blog:
"Thus it's no wonder that stocks are rallying in the face of record demand for debt, demand that has dramatically reduced long term corporate borrowing costs.

Keep an Eye on Bonds!

As long as corporate bonds fetch a good bid, which in turn allows companies to raise cash at decreasing costs, the stock market is likely to be reasonably firm. Note that the pullback in junk bonds began 3 days ago on that last red candle.

I am skeptical the rally in bonds can last much longer, but until the corporate bond market starts showing increased signs of stress, equity bears expecting huge pullbacks are likely to be disappointed."

Now that we are over 1000 on the S&P, and new highs in all the markets, and corporate bonds have rallied tremendously, he throws out the white flag.

Did that make you any money?


Anonymous said...

Do you think we will get another seasonal correction during September-October? Thanks.

Palmoni said...

Not from here..but if we get to 1160ish I think we could then get a decent pullback.

At some point, the market will recognize that the economy is still not that great...

but we need to be higher from here, before we get any selling

Anonymous said...

Have you heard of this Xtrend blog? The guy has been bearish since 666. He's been short the ES from 720. But as the market has been moving against him, he's been restating his position by shorting every 50 ES points higher. It's a good laugh.