Stock Markets Exposed - Why is the U.S. stock market drifting upward, slowly, when there has been mostly bad news?

Why is the U.S. stock market drifting upward, slowly, when there has been mostly bad news?

Meaning, in late November and December, since the dip to 7500. Since that point, the market is over 1000 points higher, on what news exactly?

Public Comments

Here are two possible reasons (I think both are partly true): 1) The stock market was oversold when people overreacted to admittedly bad financial news, and is now compensating somewhat. 2) The stock market always looks ahead to the future. If enough market participants think that the worst of the recession is not that far off, and anticipate a recovery in mid- or late-2009, then it isn't surprising that the market may recover slightly now or in Q1 '09. Now, I do not mean that everything's coming up roses and the stock market will rise straight and swift from now on. But it isn't surprising under the circumstances that we would see rallies on and off for the next few months at least.
because there are vary smart investors out there and you sit on the side lines to long and you make 0 and its not about just news its about good stock picks and some news
Because the market anticipates that most of the bad news is already out. Uncertainty is decreasing.
It is a dead cat bounce based on the hope that Obama and the Fed can make this downward spiral turn around by spending a lot of money. Google "Dead Cat Bounce" for more info. By June the DOW could be as low as 6500.
It's been way over-sold on a short term basis due mostly to hedge fund liquidation. Since about October the market has thrown all fundamentals out the window. Nothing mattered...good news, bad news, earnings (p/e ratios) ...nothing mattered. It's trying to get back into some kind of equilibrium now. Yes, the news is not good but the market way over shot to the down side. Also, if the market can gain some traction tomorrow look out for a hell of a Santa Claus rally going into X-mas. This is common in a bad bear market. everyone wants a Santa rally but they're just too afraid to buy....they need a sign of a breakout. So far every single rally for the past few months has been followed by selling. IF we close above 9000 tomorrow on decent volume and with some conviction then you will see the mother of all rallies. I think we got a good chance.
its making a lower high. When you look at the 1 year chart notice how they have sections where they go up for a few week and down for a few weeks. OCT 12 2007 - Tops at 14,100 - MARKET NOW GOES DOWN NOV 23 2007 - Bottoms at 12,900 - MARKET NOW GOES UP DEC 10 2007 - Tops at 13,700 JAN 23 2008 - Bottoms at 11,500 MAY 19, 2008 - Tops at 13,150 JULY 15, 2008 - Bottoms at 10,700 AUG 11, 2008 - Tops at 11.800 NOV 24, 2008 - Bottoms at 7,400 So now, what do we top at and when? I would guess around 9.500 and that means our next low will be below 7,400 as we are watching the economy collapse. So the reason it is going up is because it is suckers betting and making a lower high on the long term chart. Peace and light everyone Remember - TO make money on this economy, SHORT IT!
When the market drops as much as it has in the last year, it is clearly out of orbit. A lot of people are sitting on the sidelines now, and a lot of people think we have found a bottom. The market will bottom out at some point, and those who find the bottom will make a ton of money. I personally think there is over a 50% chance we have hit the bottom, and I dumped what I had left into the S&P when the Dow was at 8300. Yes, some of the news has been bad, but I don't think anyone was expecting good news. The market is in favor of bailing out the auto makers which it appears Bush is going to do. It is in favor of dropping interest rates which happened today. As far as the market is concerned, the news has not been all bad.
Wall street is said to be forward looking so currently investors are ignoring the very bad news such as US unemployment was much worse that expected in November, French industrial production had dropped by almost double of the expectation, and economies around the world going into recession but the stock markets around the world went up. However, if we look back in October and November, the stock markets dropped when companies reported worse than expected earnings. In December very few companies reported earnings so there was a very little effect on the market due to earnings reports. If several large hedge funds do not collapse in the next month (may be some ponzi schemes out there), the big test will probably occur in January when companies start to report earnings again. If the stock market can hold its ground or possibly even rise during that period of time even with lower than expected earnings, then the bear market will have reached its bottom. If it can't, the markets will again be testing and possibly breaking through its previous lows.