All Aboard -- but do we crash or get to our station?

April 6, 2009


We just came off a fairly impressive month-long run -- yeah, call it what you will: Dead Cat Bounce, Short Covering Rally, Relief Rally, Sucker's Invitational -- but the numbers are what they are.

Look at the chart on the right.  Argue with that, not me.

On Monday, March 9, 2009, the Dow Jones Industrial Average (DJIA) closed the trading day at 6,547.05.

On Friday, April 3, 2009, the DJIA closed at 8,017.59.

The raw math is that during that roughly one-month period, the DJIA was up 1,470.54 points, or about a 22.5% increase. Of course, let's not forget that on October 11, 2007, the DJIA hit an intra-day high of about 14,279.96 -- so we've fallen quite a ways and with a lot of excruciating pain.

Lest any of you misunderstand my observation, let me say it once more: We dropped 8,000 or so points from the market's recent zenith to its last nadir. In the most recent four weeks, we regained maybe a fifth or sixth of all that market destruction. We haven't gotten back to even. Not close. Everything is not rosy.

Nonetheless, we just came off a 30-day market run of two periods of four "up" days in a row and an offsetting run of no more than two "down" days in a row. Again, I'm not trying to divine anything from that data -- look at the chart and conclude what you will. 

Could the market go down four hundred or four thousand days in a row from here?  Of course, and, in fact, as I write this Blog, we're down over 100 points on this rainy, crappy, Monday, April 6, 2009.  I'm not predicting anything.  Just looking over the stats.  Just remembering that all the pros got everything wrong and now those same savants are trying to figure out if today is the resumption of a down-trend or a pause on the way back up.  Seriously, I don't have the answer--so don't look to me for any brilliance. 

Three years ago, when the stock market was roaring away like a locomotive with a full head of steam and an ample load of coal, few voices warned of any dangers up ahead. Sure, some pundits warned that we would derail, but those voices were few and their dire prognostications were laughed at, and their alarms were marginalized by the media, the issuer community, and the investing public. 

No one wanted the party end. No one wanted to hear that the host had run out of booze and the guy from the liquor store was ringing the bell and wanting to get paid.

All aboard!!

We got little useful information from virtually all the sources peddling the buys, the sells, and the holds that were uncannily and uniformly garbage. And, as with most train wrecks, there was little we could all do beyond watching the cars jackknife into each other, and then pile into the ditch, and then burst into flames, and then set off explosions at the adjacent chemical plant, which then forced the evacuation of the nearby town -- and, well, you were there know.

This afternoon, as I write this column, we're down over 100 points and it doesn't look like we're headed for a five-session winning streak.

Reading the online news, I see that the world is coming to an end and if you bought into this recent rally, you better get out quick:

Okay, so it's now crystal clear. Sell, sell, sell. This rally is a head fake. It won't last. It will fizzle. It will peter out.

Of course, for all the clear-eyed Wall Street seers whose crystal ball shows more doom and gloom, we have this counter-point:

I'll tell you what.  Let's start holding folks' feet to the fire and chiseling some of the conflicting views into stone -- you know, so that we can look back at some point in the future and see whether anyone knew what the hell they were talking about.

Date Close Up/Down From
Prior Close
3-Apr-09 8,017.59 UP
2-Apr-09 7,978.08 UP
1-Apr-09 7,761.60 UP
31-Mar-09 7,608.92 UP
30-Mar-09 7,522.02 DOWN
27-Mar-09 7,776.18 DOWN
26-Mar-09 7,924.56 UP
25-Mar-09 7,749.81 UP
24-Mar-09 7,660.21 DOWN
23-Mar-09 7,775.86 UP
20-Mar-09 7,278.38 DOWN
19-Mar-09 7,400.80 DOWN
18-Mar-09 7,486.58 UP
17-Mar-09 7,395.70 UP
16-Mar-09 7,216.97 DOWN
13-Mar-09 7,223.98 UP
12-Mar-09 7,170.06 UP
11-Mar-09 6,930.40 UP
10-Mar-09 6,926.49 UP
9-Mar-09 6,547.05 DOWN
6-Mar-09 6,626.94 UP
5-Mar-09 6,594.44 DOWN
4-Mar-09 6,875.84 UP
3-Mar-09 6,726.02 -