Economic news has been awful (housing, banks) yet the Dow is doing just fine. What gives?

Question

Those are two red flag type of sectors (housing and financial). As soon as the banks start to fail, watch out! How in the heck can the Dow have a good past couple of weeks and almost a 300 point rise today despite this news? This is amazing. Yeah yeah, I know the Dow dropped yesterday, but it really is doing quite well despite the bad bad news.

Answer 1

Banks are failing, and not even the US Government can bail them out fast enough.  I honestly think we have not seen anything yet.  The stock market is going to go a lot lower before it gets much higher.

Answer 2

Actually the Dow has not been that fine.  Down all but one month this year.  But, the recent news is better, not great, but better.  The dollar is stronger, oil has dropped $25 a barrel.  Each day the market is like a person.  If you are hungry and someone gives you ticket for  lunch even at McDonald's you react well to that change.  The market is is group of people and they react to "what is different now vs. yesterday or last week."   Earnings reports are coming in 3 to 1 favorable vs. the estimates and that helps.  The index professional investors watch is the S&P 500.  It is down into the 11, 400 range after breaking 14,000 in June, 2008.  The market is still shaky but I guess all the longs had a good day today.  If the business TV news, CNBC for example, was just a bit more pro-business it would help the psychology of the market. It really would.  One problem has been this 20 month presidential election that TV drove and kicked into high gear. It created an enviornment of uncertainity that remains.

Answer 3

It's darkest before dawn.

Answer 4

There are an awful lot of " Chicken Littles " in the Economics sector and the media sector who  are looking for the sky to fall. Half the commentators or writers are the parrots of the Associated Press . You have no idea who writes for them.  And never forget that there are many speculators( Investors) who sway the market and are usually the benificiaries of their actions.Speculators see a chance to make money, do many trades, stimulate the markets and we clowns follow, only too late.

Answer 5

Historically there has been more bull markets than bear markets.

Also the bear markets are much shorter 3 months to 2 yrs vs bull markets which can last for years.

Buy low/Sell high ---the market is really low, so now's the time to buy.