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BEHIND THE MONEY: BUYING ON BAD NEWS, EVERYBODY'S DOING IT
A quick note on a phenomenon we intend to explore on tonight's show: Buying on bad news.
Earlier this week, we saw it in General Electric [GE
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], Sears [SHLD
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] and Research In Motion [RIMM
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]. All three were beaten-down shares that rose after the companies issued lower outlooks. Today, we're seeing it in spades.
DuPont [DD
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] says it is going to LOSE money in the fourth quarter. Shares higher.
Nokia [NOK
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] says global handset market will shrink next year. Shares higher.
Toll Brothers [TOL
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] says 2009 revenues will be significantly below those of 2008. Shares 11 percent higher!
AT&T [T
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] cuts 12,000 jobs and reduces 2009 capital expenditures. Shares close to breaking into the green.
The traders have said this is a "somewhat encouraging" sign. Encouraging to veteran traders like Guy Adami, because it means the market is responding more to technicals and likely has further to run on the upside. Guy has cited the mid- to upper- 9000s has the top of a range for the Dow Average.
"Somewhat" because it's still too early to call it a definitive sign that ALL THE BAD NEWS is priced in. Things can always get worse. Analyst estimates are all over the place. CEOs don't know for sure what this new year will bring.
And this week is just the first wave of 2009 outlooks. From here until the end of December, there should be a flurry of them. If the market can keep rising in the face of this barrage, then it may be time to get more bullish.
ONE MORE NOTE: Jeff Macke flagged this headline to me yesterday. He found it quite ironic.
Reuters: Fortress Suspends Redemptions For Now
I'll add this one from Dow Jones into the mix.
DJ: Fortress Invest: Drawbridge Global Redemptions Suspended
The drawbridge is indeed up. This one I did not see:
Fortress to Pour Boiling Oil on Investors Trying to Redeem Funds.
John Melloy is the Senior Editorial Producer for Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.______________________________________________________
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