Often a case can be made that the media controls the people who live on earth. If you look back over the past fifty years many can argue that the media has actually been the main catalyst for actually electing a president or any elected official for that matter. If you go back to the 2000 election many people still shake their heads when Al Gore lost the election to George W. Bush after being the vice president of the administration that was in power during the biggest stock market rally in history in the 1990’s(Clinton administration). However, as we all know President Bush was declared the controversial winner and proclaimed by the media as the person who Americans would most likely share a beer with. I’m not sure that should be a reason to get elected. If you look at the Bush verse Kerry election in 2004 the same case can be made. President Obama was was a media favorite and got all good press even when his campaign hit stumbling blocks when the Reverend Jeremiah Write statements came about. President Clinton came through numerous negative situations and is still loved in the media after White Water, Jennifer Flowers, Paula Jones, and the Monica Lewinsky scandals. Therefore, regardless of party lines the media is a powerful tool and does have an effect.
Does the media effect the markets? Many may say absolutely not. However, they can definitely put their spin on public sentiment. Just look at the current rally from the March 2009 lows. The media continues to report that commercial real estate is the next shoe to drop on the stock market. Yet the iShares Dow Jones U.S. Real Estate Index ETF(NYSE:IYR) is at new highs for 2009. The same can be said for Simon Property Group(NYSE:SPG) which is a leading stock. This story is talked about every single day in the media. Many traders know that when the public is looking for something rarely will it occur.
Just look at the housing market back in 2005. Stocks like KB Homes(NYSE:KBH), Toll Brothers(NYSE:TOL), D.R. Horton(NYSE:DHI), and countless others were soaring to new all time highs. The media loved the housing market and in June 2005 Time Magazine had a cartoon cover of a man hugging his home with dollars flying in air. Two months later the housing top was in and a correction for the ages was underway in the housing sector. It was the positive media press that was catalyst for people believing they were missing out on buying a home or even flipping them around that time. Today delinquencies and foreclosures are at all time highs.
Currently through most of 2009 the media continues to try and call or predict every correction in the market. What ever happened to just reporting the news. The mainstream and cable media stations all have an agenda. Everyone has a bias. There is no longer any objective reporting. People are seeking the internet for their news and views. Who can blame them. The markets have still not experienced a single ten percent correction since the March low. This is not healthy market action. Healthy markets have corrections. Healthy markets rise on strong volume and pullback on light volume. Currently the markets have behaved just the opposite. In history we have never seen or had a V- bottom recovery. Currently we have a V-bottom pattern in place on the charts. While some will say there is always a first for everything I’ll bet with history.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
