History and Emotions
The market has responded nicely to the good news of statues falling in Baghdad. I am very proud of our troops and their leaders and grateful for those who gave their lives to help prevent take another building falling near me. We truly live in a blessed land of opportunity.
I also think it is important to remove the emotions that such a historic event conjures up. While I was on Bloomberg Radio this morning, I was asked: "Isn't this very positive for the market?" The clear answer is that it was two victories ago. Basically, it has been clear for days that the coalition was going to win.
Remember walking in to see a 24-point rally in the S&P futures on anticipation that the coalition was going to take Iraq's capitol city? The next day brought the pictures of American troops sitting in Saddam's palace and an indication of up 10 points in the S&P futures. Then we have Iraqi citizens standing on a statue of Saddam, preparing to tear it down, and futures are indicated up 2.80.
In each case, the up market was met with some level of profit-taking and selling because there has to be something behind it. The market trades higher on hope and expectations but must stay up on reality and improvement. The trade was up 12% from the lows on hopes that once the war was won, consumers were going to flock to the stores and buy everything in sight. I don't know about you folks, but I feel great that we won and have a glow -- but am unlikely to go out and spend big tonight or this weekend at the mall.
Some level of that is discounted and -- after a three-year grizzly bear market -- I think a lot of folks want to see some real recovery and not more guesswork from Wall Streeters like me.
Hope lifts the tape off the low, but reality must improve to keep it there. That should take some more time. Until then, I will turn back to watching a billion charts a day to see if any change is coming -- up or down. Right now, I don't see a heckofalot other than neutrality.
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