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If the Stock Market Were a Movie...

July 25, 2008 2:44 PM

ABC News’ Bianna Golodryga reports: If the stock market were a movie, it would look a lot like "Sybil." Sally Field's character had 13 personalities, and for the last 13 days, so has the market.

Rt_nyse02_080201_main Triple-digit selloffs are followed by triple-digit rallies. Bad economic news one day is followed by not-so-bad news the next.

Just compare Thursday's action with today's. Thursday's nearly 300-point selloff was triggered by a report showing that existing home sales for June were at their lowest level in 10 years. Add to that news that U.S. foreclosures in the second quarter more than doubled compared with a year ago, and soared nearly 14 percent within just the last three months.

For investors, it was just another reminder that the housing market is nowhere near hitting bottom. Or is it?

Just hours later came word that the decline in sales of new homes in June was smaller than analysts' expectations.

As for that shaky consumer sentiment ...a report out this morning shows that it's not that bad. Durable goods orders were also better than expected. So what gives? Don’t worry about it, because the truth is, no one really knows.

But wait a minute, if that's the case, then maybe we should worry? (You see my point about Sybil?) Take financials, for example. After the Treasury's valiant attempt at resurrecting Fannie and Freddie combined with the sense that most large banks will not fail, financials came back from the dead with a vengeance.

Forty percent swings by a stock in one direction were immediately followed by 60 percent swings in the opposite direction. Better than expected reports out of Citi, JP Morgan and Wells Fargo all boosted confidence that maybe financials were finally making progress at cleaning out the skeletons in their subprime closets and were ready for a significant recovery.

All of the sudden, anyone who was short financials quickly reversed course. But that too, didn’t really work. Liquidity concerns about Wachovia and Washington Mutual, Merrill Lynch selling its stake in Bloomberg to raise capital and continued whispering about the state of affairs at Lehman Brothers reminded investors that all is not well, not yet.

It was a busy week for earnings as well. For anyone keeping track, we're now halfway through second-quarter earnings season. So far, nearly 70 percent of S&P 500 companies have beaten Wall Street estimates.

But when you break down the sectors, you can see where the true problems are. Eighty-five percent of financial companies reported earnings below estimates. And until the financial and housing sector can stop the hemorrhaging long enough to convince investors that the worst is behind us, we can expect to see more volatility, mood swings, and yes, "Sybil-like" behavior on Wall Street.

As Wall Street power player Doug Kass so eloquently put it this morning, "If you are not facile, fleet-of-foot and you are unaccustomed to the volatility, don't produce (or invest/trade!) -- just watch the movie, eat some popcorn and drink a Duff."

And whatever you do today, try to enjoy what is shaping up to be a rather quiet day for the markets. Because come next Friday it will no doubt be quite the opposite. The jobs report for the month of July is expected to show a loss of 85,000 jobs, with the unemployment rate steady at 5.5 percent.

But according to Deutsche Bank, which expects that level to grow to 6.5 percent by the middle of next year, we're nowhere near the bottom in the labor market. If that wasn’t enough, motor vehicle sales for July will be released, as well as construction spending figures. Both are expected to show continued declines.

July 25, 2008 | Permalink | User Comments (12)

User Comments

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Sybil was shown to be a fake. It's interesting that a highly educated journalist does not know this fact.

Well, why so serious?

Posted by: Joker | Jul 25, 2008 3:14:51 PM

This whole market needs to go away. They play with people's lives. Who are these idiots anyway. Same with the oil companies. Our government has the power to do something about the high oil prices, but why should they? Too many have their pockets lined with oil.

Posted by: Kris | Jul 25, 2008 4:07:01 PM

Sybil was real:
Robert Rieber presented a paper where he outlined the contents of a set of tape recordings that had been provided to him. Based on the tapes, he declared that Mason(Sybil's real name) had not suffered from multiple personality disorder.

He never examined Mason(Sybil), how would he know? Her doctor always claimed her personalities genuine.

Posted by: JR | Jul 25, 2008 4:15:01 PM

It is hard to believe that individual investors are sitting at their computers daily, or calling their brokers daily and buying and selling on whims. The sheer amount of tax paperwork would discourage that. This 'has' to be the work of bank and investment company computers that trip based on a number of variables and sell or buy huge chunks. It would be nice if the media, instead of its constant panic mongering would do a real study and determine just who or what is doing all the trading.

If all the trading is being done by individuals, they are missing some of their marbles.

Posted by: Mike | Jul 25, 2008 4:15:31 PM

HI MR. MIKE THIS IS ARUN FROM INDIA, I M ALSO WORKING WITH INDIAN STOCK MARKET AS A BOLT OPERATOR, JOBBING AND TRADING WITH SHARES FOR CLIENTS.I WANT MORE INFORMATION. DO ON MY FAVOR SAME AT SAME TIME.

Posted by: ARUN | Jul 26, 2008 2:43:34 AM

Does anyone else feel like Charlie Brown always trying to kick the football?

Posted by: LongT | Jul 26, 2008 9:05:53 AM

The Wall Street oil futures traders and mortgage industry traders are doing a great job of raping the middle class of this country and lining the pockets of the rich. They should have never been allowed to get so powerful. Only under Republican leadership would these things get so out of hand. The government should put restrictions on these types of trading, but the GOP has always fought that because it hurts the rich good-ol-boys club.

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Posted by: KnowYourProfit | Aug 2, 2008 12:25:23 AM

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