Hello November - It Feels Like 2002 All Over Again

The Dow Jones Industrial Average finally closed below its November 21 closing low, and is now at the lowest level since 2002. The S&P and the NASDAQ have not broken the November lows.

Is there really a reflation trade? I have told you that small groups of traders have been attempting to buy commodity and commodity stocks in the past couple weeks, under the theory that governments around the world—particularly the Chinese—are attempting to "reflate" their economies.

So far, this trade has been unsuccessful for anything more than a day trade, but they are trying it again today:

1) Governments worldwide—particularly in China and the U.S.—are attempting to stimulate their economies;

2) Today, PPI was stronger than expected;

3) Some are starting to bet that the recent dollar strength will moderate;

4) Oil analyst Paul Cheng at Barclays made a call this morning to sell defensive oil names (Exxon) and get into higher-beta, mostly oil service names (Transocean, Chesapeake Energy, Noble, Rowan, and Ensco), under the theory that those names were likely bottoming. Classic stock-picking calls like this have been rare recently, since stocks have been trading as a single asset class recently.

Bears, of course, outnumber these few bulls.

Bears say:

1) These are all rallies in bear or sideways markets;

2) We will not "reflate" until we see positive macro data;

3) There are far fewer "speculators" to make these kinds of trades, and the leverage people used has been cut dramatically.

• Why Warren Buffett Isn't a Hypocrite

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• The Dow 30 in Real Time
• The CNBC Stock Blog

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