Dead Cat Bounce / Bull Trap / Suckers' Rally

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SagerXX's picture
SagerXX
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Dead Cat Bounce / Bull Trap / Suckers' Rally

So it seems we have a l'il "rally" underway.  I've seen a few folks mention 8000 as a possibility short-term (before the Alt-A resets or credit-card company crises et alia).  Is there a historical record for the size/duration of suckers' rallies in previous bear markets, i.e., do they generally pop up x% and/or last y weeks before the onset of another drop?  

Thanks ya'lls -- Sager 

RNcarl's picture
RNcarl
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

I wanna know too... seeing how I missed getting out at 13000!

I am waiting to see just how high this "dead cat" bounces.

joemanc's picture
joemanc
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally
Quote:

  I've seen a few folks mention 8000 as a possibility short-term (before the Alt-A resets or credit-card company crises et alia)

And the baby boomers selling off assets.

Brainless's picture
Brainless
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

The dollar and the stock market are running inversely of eachother. So a gain in stocks is diminished right away in real value. I would sell remaining stock tomorrow and replace that  cash with gold. At least you will have a better change of holding on to that value.

 

 

investorzzo's picture
investorzzo
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

Definitely won't last. I suggest you listen to this show. It's free, where others will get you to pay thousands for the same info. Updated every Saturday.

http://www.financialsense.com/fsn/main.html 

 

jerrydon10's picture
jerrydon10
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

No one has a crystal ball, but we can look at history. Note that from 1929 to 1932 when the market reached it's lowest, there were several "apparent" recoveries as the whole thing crumbled.

http://www.wisetrader1.com/?p=319

I expect to see many recoveries along the way this time as well; but I'll eat my hat if we have yet reached the bottom.

SteveS's picture
SteveS
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

Although a lot of pundits seem to feel there will be a substantial, though short, rally, I would be surprised to see it amount to much. I am far from being any kind of market guru, but my gut says this huge decline has focused everybody's attention on the market, even those that never checked their 401K statements before. That along with people losing jobs and houses, makes me  think that a lot of people are itching to cash out. So my feeling is that any decent headway made in the market will be beat down by sellers. In addition, I just can't conceive of any fundamental turning positive enough that would justify a major rally. Of course history is made by black swans, so who knows.

slabinja's picture
slabinja
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

There seems to be a differing of opinions on this matter.  Some pundits are saying that they have been expecting a "bear rally" because stocks were "oversold."  A lot of these individuals have charts which show where they say there is "support" for things to rise and other points where they expect the market to fall. (I have no training in this area).  To support this viewpoint historically, during the last depression (1930s) there were some fairly large rallies. (As someone alluded to in an above post)   If you know how to "short sell" you can probably come out very profitable during such a rally.

On the other side, there are those that think that this is a short rally which will end perhaps on Monday (we'll know soon enough), and they have charts to back up their opinion as well.

Jim Rogers, on Bloomberg yesterday, said that he is "shorting the financial stocks," and also said that the rally could last "weeks, days, or months."  In other words, he doesn't know, and in truth, none of us do.  I have also heard him say on a previous occasion that he in not good at "timing" things, meaning dips and rises.

Personally, I ask myself , "Do you want to buy into this rally?" to which I answer "No." But I have bad timing with lows and highs and don't have the guts or temperament to do it.  Also, if one has a tendency to make emotional decisions (which we all do), then it is best to sit on the sidelines on this one.

And perhaps we should never underestimate how people get caught up in euphoria with "good news." (and bad news as well) The CEO of Citi put out a memo stating that his company is "profitable," and Citi stock doubles (although it was very low).  This points to short-selling.  Also, the CEO of B of A says the same thing and his stock goes up.  Maybe people are believing these statements and buying into it.  Those of us that have been through the Crash Course are probably looking at things from a more "long-term" perspective in regards to how things will turn out (at least I like to think so). 

On the other hand, the stocks have been going down miserably partly because Geither is not saying anything and a lot of investors got nervous.  The banks really weren't doing anything differently, so part of the crash was perception as well.  Personally, I believe that the market will probably go down to the 3000-5000 level because there can be no recovery until all of the toxic assets are out of the system, and since no one knows how much is really out there or if they do and are hiding the information, this could be a long process.

 Just my opinion...

Any other opinions out there? 

 

 

capesurvivor's picture
capesurvivor
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

Bernanke is on "60 Minutes" Sunday nite; probably a good time to short the market Monday.

If the market does drop after his speech, that would consistent with other honcho speeches and an obviously bearish sign.  

 

SG

slabinja's picture
slabinja
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

When Bernanke has spoken in the past, it has caused a small rally.  However, this is in no way the bottom, but a "bear rally."  There was one in November as well.  The people in power are doing what they can to avert any "panic," and perhaps that is what they should be doing.  The magnitude of the problems are probably beyond what any of us can fathom. 

capesurvivor's picture
capesurvivor
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

I don't believe that anyone in Bernanke's position has ever appeared on a venue like "60 Minutes".

That's a pretty good indicator of how scared these folks are, IMHO.

 

SG

slabinja's picture
slabinja
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Re: Dead Cat Bounce / Bull Trap / Suckers' Rally

For a people who ran such a stellar election campaign, the Obama people have totally sucked on sending any positive message to the electorate about the economy.  It appears that they don't know what they're doing in regards to "fixing" it, but you would think that they would at least try to put on a positive face during this crisis, signalling that they're "in control," (At least until they go to Congress to ask for more bail-out or stimulus money). 

So, I'm thinking that the Bernanke appearance on 60 minutes is part of a campaign to settle the market or keep the bounce going.  Who knows who the interviewer will be and whether he'll throw soft balls or hard balls.  Still, I'm surprised that it took the Bama people so long to try to put a positive spin on this whole thing, considering how much money that they've gotten out of Congress and how much more they will probably ask for. 

Perception is almost everything (up to a certain point called reality), especially in a media-driven country like the US. 

 

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