Monday, April 6, 2009

Markets: It's Starting To Look a Lot Like November

Mark Gongloff is one of the best market writers in the biz.
From the Wall Street Journal:

The recent stock-market rally is turning heads. Why, there hasn't been anything like it since at least...November.

The Dow Jones Industrial Average has bounced 22.5% in 19 trading days, the best such stretch since 1938. The broader S&P 500 has jumped 24.5% during that time.

Amid the cheer it is easy to forget that the short-lived bounce off the market's November 2008 bottom was nearly as strong as this one. Until this past Thursday, November's rally was bigger, with the S&P 500 up 21% in 17 days, compared with 20% for the current bounce. The earlier surge carried through to early January, but then fell off a cliff to hit 12-year lows.

[Cumulative S&P 500 percentage change from bottom]

Why might this time be different?

For one thing, the November rally was based on flimsier stuff. It was sparked by the announcement that Timothy Geithner would be then-President-elect Barack Obama's Treasury secretary, a choice that pleased Wall Street, at least for a while. It was helped along by other government actions, including a massive Citigroup bailout and talks about keeping auto makers from bankruptcy. The government's approaches to those problems are dramatically different now....MORE