This market makes no sense to me

Well, it never made much sense to me.  But this past week has been especially baffling.

Good thing Yves Smith of Naked Capitalism is trying to make some sense of things (let’s hope she adds to this post in the future):

“I am puzzled by some recent market anomalies, which are breakdowns of established patterns:

1. Long dated Treasuries rising (a deflation signal) as stocks stage a dramatic rally

2. Dollar weakening while long dated Treasuries rise (the dollar and bonds usually go together)

3. Oil stocks rallying more than the S&P (28% versus 18%) when oil prices continue to weaken and heating oil looks primed to fall”

That’s your teaser.  Check out Naked Capitalism for the rest of the post, including a collection of data and analysis.  Quite frankly, things aren’t much more clear for me after reading it but that is reflective of my own failure of comprehension, I suspect.

I have a gentleman’s bet with a friend that we have not seen the bottom yet for the Dow Jones.  He says that we won’t fall below the 7,500 we’ve already hit.  I am calling for 7,200 or below, with a decline heading into the New Year (it’s a mulligan if it falls between the two values).  I foresee no good news for shareholders from now until 2009 (maybe February or March where we will cease to see continued downwards corrections from analysts and companies).  Even the impending GM bailout won’t do much for their shareholders from the current $5.50 mark or so (including after hours trading).

We’re experiencing a larger surge than usual with the latest Fed interventions into the financial market, but as all previous interventions have proven short-lived, so will this one.  And when the market realizes the Fed’s commitments only provide an illusion of repair, the market will return to falling until the next big, dramatic intervention that doesn’t really do all that much.

(That’s my prediction, anyways.)

… and the cow goes moo