Bull Trap or restarting a Bull run?

[Fermion]

Quote:

Originally Posted by Toocold Vast majority of the people on this thread believe that it's a bear trap. This means, it's a another bull run

sigh. Bull trap. Bull trap. Trapping a bull.

The animal that is being trapped doesn't usually set the trap. At least I have never seen a bear go out and put one of those claw traps on the ground.

It is a bull trap when you mean that bulls will be getting fooled by a fake market rally and it is a bear trap when you mean that the bears will be getting fooled by a short dip in a rally.

[Toocold]

Quote:

sigh. Bull trap. Bull trap. Trapping a bull.

To make you happy, I edited it to bull trap. Relax

[Fermion]

Quote:

Originally Posted by Toocold To make you happy, I edited it to bull trap. Relax

Thanks!


It isn't as bad as using there and their incorrectly but still is annoying.

[GenXguy]

Quote:

Originally Posted by Toocold Vast majority of the people on this thread believe that it's a bull trap. This means, it's a another bull run

I believe it's a bull run in the future at some point, sure. That point hasn't been reached yet - the market still has to find a new bottom, which is hasn't settled on yet.

[harley]

Quote:

Originally Posted by brewer12345 I will say that I don't know which of these is the case, but I am not buying until it becomes clear.

I understand completely, but that is exactly what I was thinking in 2009-2012 when I missed a lot of the run up. I think buying at various low levels might be a better idea, sort of DCA'ing at a level you are pretty sure will eventually be exceeded. I don't mind doing some buying and seeing the price drop from there, since I'm pretty sure that in 5-10 years this will be another one of those dips in the overall upward chart line.

[brewer12345]

Quote:

Originally Posted by harley I understand completely, but that is exactly what I was thinking in 2009-2012 when I missed a lot of the run up. I think buying at various low levels might be a better idea, sort of DCA'ing at a level you are pretty sure will eventually be exceeded. I don't mind doing some buying and seeing the price drop from there, since I'm pretty sure that in 5-10 years this will be another one of those dips in the overall upward chart line.

At cheap enough prices I will hold my nose and buy. Not there yet.

[k-man]

There's no way this is the bottom. Many of us have been through the dot.com bubble and following recession. We've been through the housing bubble and Great Recession. The happy talk about a "V" out of this thing is over. Now we're hearing a "wide U". I just don't believe it. There is so much damage being done at this time. The stimulus money is taking way too long to get to those who need it most. The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months. Expect many additional shocks along the way. We were in a Vanguard 60/40 balanced fund and moved to their Treasury fund at the close on February 25th. We may start to move back into the market in increments at 40% down and continue as it moves forward. We'll never time the bottom, but hoping to avoid the worst of it. When we get back in we'll be much more aggressive, possibly even VTSAX. Good luck everyone....tough times. Also..full disclosure, my spouse's business is completely shut down, so she'll apply for the PPP program, but we're losing there. We also had a special trip booked to South Africa in May and may end up losing that money as well. Stay smart, healthy and safe!

[RAE]

Quote:

Originally Posted by k-man There's no way this is the bottom. The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months.

+1, I agree. In my opinion, it's way, way, way too early to even think about buying into this market right now. This is not something that is going to end quickly, nor is it a situation where the market is going to come storming back rapidly. The economic impact we are seeing with this virus is unlike anything the world has faced in a long, long time, if ever.

[Jerry1]

Quote:

Originally Posted by Fermion Thanks! It isn't as bad as using there and their incorrectly but still is annoying.

They're, they're now. It will be fine.

[REWahoo]

Quote:

Originally Posted by Jerry1 They're, they're now. It will be fine.

Here here!

[airforce1]

Quote:

Originally Posted by k-man There's no way this is the bottom. Many of us have been through the dot.com bubble and following recession. We've been through the housing bubble and Great Recession. The happy talk about a "V" out of this thing is over. Now we're hearing a "wide U". I just don't believe it. There is so much damage being done at this time. The stimulus money is taking way too long to get to those who need it most. The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months. Expect many additional shocks along the way. We were in a Vanguard 60/40 balanced fund and moved to their Treasury fund at the close on February 25th. We may start to move back into the market in increments at 40% down and continue as it moves forward. We'll never time the bottom, but hoping to avoid the worst of it. When we get back in we'll be much more aggressive, possibly even VTSAX. Good luck everyone....tough times. Also..full disclosure, my spouse's business is completely shut down, so she'll apply for the PPP program, but we're losing there. We also had a special trip booked to South Africa in May and may end up losing that money as well. Stay smart, healthy and safe!

Concur 100%.

During the Great Recession in 2008-09, total job losses were 8.8 million over 25 months versus a total of 9.96 million initial claims in just two weeks. That's very sobering.

The FED and the GOV may try to legislate or stimulus the way out but CoVID-19 is ultimately dictating the way consumers and businesses behave.

Lose a house in the Great Recession? "Oh well, a black mark on my credit rating and I have to tighten my belt"

Pandemic? "I could die. I need to stay home"

Stakes are different.

As I posted elsewhere, I have now reallocated my TSP to 90% G Fund, 10% C Fund and won't change until I see majority of countries exhibit flattening CoVID-19 growth curves.

And let me add that currently China is not honest with their CoVID-19 numbers as people suspected and I believe this pandemic will be the straw that broke the camel's back and destroy their large shadow banking economy.

Stay safe everyone!

[k-man]

You bring up a point that I think is crucial. And that is consumer behavior and sentiment when we get through the first wave of this deadly virus. Yes, there will be some pent-up demand, no doubt. But how many people are jumping on flights? How many going to concerts, to the movies, to packed theme parks? How about business conferences in convention centers? Family weddings, parties, even funerals. Anything that normally is an intimate affair with hand shaking, back slapping, high fiving and hugging? It's going to be a rough 6 months or so. I do believe in this nation. 1000%!! But we're in the soup for awhile until we figure out how to live in this new normal.

[boatfishandnature]

This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world). An upside would be an effective medicine to make the infection milder, which could happen much sooner. In most recession this certainty on the timing of the reasonably likely worst case scenario is not there. The recovery from previous epidemics of the past century or so (1918 Spanish Flu, 1957 H2N2) have been V-shaped. There is good reason to think that the most likely scenario is a V-shaped recovery, just not very soon.

[Dtail]

Quote:

Originally Posted by boatfishandnature This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world). An upside would be an effective medicine to make the infection milder, which could happen much sooner. In most recession this certainty on the timing of the reasonably likely worst case scenario is not there. The recovery from previous epidemics of the past century or so (1918 Spanish Flu, 1957 H2N2) have been V-shaped. There is good reason to think that the most likely scenario is a V-shaped recovery, just not very soon.

A month ago I also thought the same thing, but will there be too much damage to the economy baked in before the vaccine is discovered?

[airforce1]

Quote:

Originally Posted by Dtail A month ago I also thought the same thing, but will there be too much damage to the economy baked in before the vaccine is discovered?

Yes, I think so. Once you have 10 million out of work, it's hard to place that genie back in the bottle. I predict several million will be added to those numbers in the next 6-12 months.

It took 10 yrs to recover from the Great Recession, so the confidence level is high that it will take just as long to see the light at the end of that tunnel.

[Doc0]

The way growth curves work is the peak is reached when the second derivative changes sign. Once it changes sign the curve still grows just at a slower rate. If you're making 100K new cases a day, the next day you may make 99K then 98K etc. If you're making 100K cases a day under quarantine and the next day 99k and you lift the quarantine 5 days later you will be making > 101K and the second derivative will have changed signs again, so dequarantining COVID is not going to be risk off risk on proposition but a chop of local flareups. If the staff of Wendy's flares up, Wendy's goes back in quarantine for 2 or 3 weeks. Doesn't sound very V shaped to me. Also pandemics tend to take 2 years to reach herd immunity enough to reduce the R0 <1.

I dunno never saw 10M newly unemployed in 2 weeks before. Goldman predicts a -33% GDP never saw that before. The FED more than doubled it's balance sheet in a few weeks. These are all signs of monstrous instability and that will wreak true and lasting economic destruction. I doubt many biz's are going to survive 6 months of shut down due to debt load. Once we do reopen there will be no "pent up demand", because all the reserves will have been consumed. You're NOT going to Disney World which means Orlando stays in depression. Multiply that scenario by a few million. In the middle of a depression I'm not buying a new Ford truck, BUT given all the funny money inflation will likely happen on consumer staples, so no demand for Fords will cause Ford to be in depression with no jobs, and hungry children will cause bread to go to $50 bux a loaf. Ford's debt got down graded to junk today. Junk is freezing up which means the debt will sell for 10 cents on the dollar and Ford's likelihood of solvency comes into question. This is called stagflation no growth and high unemployment due to lack of demand and onerous debt and super high cost of living due to in this case MMT. The FED doesn't have a clue what they are doing.

I've been day trading the S&P using SPY on up days and SH on down days. I make about $300 a day but I put only a tiny tiny fraction of my money at risk, and I scale into the trades. Since trading is free now and I trade a Roth account, no drag due to trading costs and no taxes on profits. I may go long or short or flat several times a day if the market threatens to reverse. Beats watching that crap on CNBC

[Dtail]

Quote:

Originally Posted by Doc0 The way growth curves work is the peak is reached when the second derivative changes sign. Once it changes sign the curve still grows just at a slower rate. If you're making 100K new cases a day, the next day you may make 99K then 98K etc. If you're making 100K cases a day under quarantine and the next day 99k and you lift the quarantine 5 days later you will be making > 101K and the second derivative will have changed signs again, so dequarantining COVID is not going to be risk off risk on proposition but a chop of local flareups. If the staff of Wendy's flares up, Wendy's goes back in quarantine for 2 or 3 weeks. Doesn't sound very V shaped to me. Also pandemics tend to take 2 years to reach herd immunity enough to reduce the R0 <1. I dunno never saw 10M newly unemployed in 2 weeks before. Goldman predicts a -33% GDP never saw that before. The FED more than doubled it's balance sheet in a few weeks. These are all signs of monstrous instability and that will wreak true and lasting economic destruction. I doubt many biz's are going to survive 6 months of shut down due to debt load. Once we do reopen there will be no "pent up demand", because all the reserves will have been consumed. You're NOT going to Disney World which means Orlando stays in depression. Multiply that scenario by a few million. In the middle of a depression I'm not buying a new Ford truck, BUT given all the funny money inflation will likely happen on consumer staples, so no demand for Fords will cause Ford to be in depression with no jobs, and hungry children will cause bread to go to $50 bux a loaf. Ford's debt got down graded to junk today. Junk is freezing up which means the debt will sell for 10 cents on the dollar and Ford's likelihood of solvency comes into question. This is called stagflation no growth and high unemployment due to lack of demand and onerous debt and super high cost of living due to in this case MMT. The FED doesn't have a clue what they are doing. I've been day trading the S&P using SPY on up days and SH on down days. I make about $300 a day but I put only a tiny tiny fraction of my money at risk, and I scale into the trades. Since trading is free now and I trade a Roth account, no drag due to trading costs and no taxes on profits. I may go long or short or flat several times a day if the market threatens to reverse. Beats watching that crap on CNBC

So DOC, with all the above statements, what is your low call on the SP500? above

[Helen]

Quote:

Originally Posted by boatfishandnature This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world).

I'm more concerned about the fallout from the stimulus. Our national debt is sky rocketing and each bailout gets bigger and bigger. We keep propping up a growing bubble. The pandemic seems like the short term problem, but there may be a much bigger problem looming in the background.

I should have paid better attention in my macro economics classes, I just have no guesses as to what the after effects will be, if any.

[RAE]

Quote:

Originally Posted by airforce1 Yes, I think so. Once you have 10 million out of work, it's hard to place that genie back in the bottle. I predict several million will be added to those numbers in the next 6-12 months. It took 10 yrs to recover from the Great Recession, so the confidence level is high that it will take just as long to see the light at the end of that tunnel.

Yes, and you have to remember that a lot of these people will have no jobs to go back to, once this is over. They are now estimating that about 1/3 of all restaurants/pubs will go out of business, along with a whole lot of travel-related jobs, and basically any jobs that involve larger groups of people getting together for anything (conventions, movie cinemas, music concerts, etc, etc). That is a tremendous amount of jobs that are just going to be lost, period. And all those people that are out of work will not be buying cars, will not be buying new homes, and on and on. Sure, they may eventually find new work, but it will take a long time. This is a big deal, folks, unlike any previous recession I have lived through.

[2177V]

People should look at what happened during the 2008 bear market. There were multiple stock market bull market rallies only to drop even further into negative territory. I read that S&P500 lost $5T so a $2T stimulus is a drop in the bucket since S&P500 does not include the mid caps, small caps, etc.

With millions of people not being productive, do people really think that a bull market rally will put these unemployed people back to work? Like Dr Fauci stated: The Virus will dictate the timeline.