Is This Rally The Final Kiss Good Bye?

[SlowDownFast]

ETFguide.com

Is This Rally The Final Kiss Good Bye?

Friday August 21, 1:19 pm ET
By Simon Maierhofer

Investors tend to love templates and patterns. Why? They provide a market guidance that offers a higher probability of accuracy than most other research. Some say that those who don't learn from history are doomed to repeat it.

How is this for historic irony, the first leg of the Great Depression reduced the Dow Jones (DJI: ^DJI) by 48%. The subsequent rally lifted the Dow nearly 50%.

Fast forward and you will find that the first leg of this recession melted the Dow Jones (NYSEArca: DIA - News), S&P 500 (SNP: ^GSPC), and Nasdaq (Nasdaq: ^IXIC) by just over 50%, while the rally from the March lows - reminiscent of the 1930s rally - also propelled a 40%+ rise in the major benchmarks.

For those hoping that the parallels end there, I'd like to quote Billy Mays, 'But wait, there's more!'

Don't trust what you see - read between the lines

To understand the full severity of what's at stake for investors, consider what author John Kenneth Galbraith observed about counter trend rallies during the Great Depression. While you read this, think about a bait-and switch trap. As the word implies, a trap is less than obvious, otherwise it would fail its purpose as a trap.

'Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune.' We will quote another of his sobering observations in a moment, but first let's see what the parallels were between 1929 - 1932 and 2007 onwards.

More:
http://in.us.biz.yahoo.com/etfguide/090821/351_id.html?.v=1

[The_Casual_Observer]

1. A 50% decline from the top is a much bigger deal than a 40% rise from the bottom.

[mnhtnbb]

2. The talking heads (interviewees) this a.m. on CNBC were

coming down on the side of positive earnings surprises lifting the market higher. One guy said
he'd be less surprised by positive news propelling the numbers higher than he would be surprised by negative news dragging the market back down.

[CoffeeCat]

3. I hope everyone here is prepared...

It's like we're at the point, where we know there's been an earthquake at sea--but we don't quite
know yet if there is a resulting tsunami. No one knows if they should stop playing volleyball
in the sand or run like hell for high ground.

It doesn't help when the corporatist MSM is screaming daily, "Come on in! The water is fine!"

We had the earthquake, now we're about to get gobsmacked with a horrendous tsunami. Unfortunately,
most of America is standing on the beach.

People need to prepare by getting some cash out of the banking system, saving as much cash as you can and
stockpile essentials.

From the OP article:
"Every single sector of the real economy is deteriorating, whether it is unemployment, production, corporate profits, real estate, credit defaults, federal deficits, or construction. The discrepancy between fact and fiction is seen by the SPDR Homebuilders ETF (NYSEArca: XHB - News). Builders have nothing to build, yet XHB has rallied over 30% in less than 30 days.

With almost a year of housing inventory yet unclaimed, one wonders who is supposed to be buying homes? Unemployment rates - calculated the way the government used to do it before it was changed in the 1990s - pegs the real unemployment rate around 20%, or 30 million people. During the Great Depression, unemployment reached 25%, the non-farm peak figure of the 1930s clocked in at 35%.

If you think 30 million unemployed is bad, consider the following which puts a face on an otherwise stale statistic. Each of the 30 million unemployed US residents probably supports a family, whether a spouse with children, or just a spouse. Based on 2-4 dependants per unemployed worker, a range of 60 to 120 million Americans are already affected by unemployment; that's 20 - 40% of the US population."

[inna]

4. extraordinary excerpt, thanks for quoting. nt

[angryfirelord]

5. Some more info to back it up

http://www.financialsense.com/editorials/bronson/2009/0819.html

[TheWatcher]

6. Yes.

[upi402]

7. I saw J K Galbraith on W F Buckley's show kicking Buckley's ass

I ran out and bought his book 'The Good Society'.
Why don't high schools teach this stuff, and labor history too?

Oh yeah, we might not be loyal CNN and Fox drones if we learned to think critically. Doh!

[wuvuj]

8. Seasonally....

...the market tops around this time down into Oct....and we've just had a parabolic rise....

Possible that "happy" can overcome seasonality and cycles...but I wouldn't count on it. Might be time to get real?

[wuvuj]

9. Multiple bubbles being blown?

http://www.uncommonwisdomdaily.com/is-the-crisis-over-6586