Mediorce Week on the Market - But At Least 3 Signs Point Much Lower

The past week wasn't too bad on the stock market, as we got a short-covering rally on Friday. But, the news flow isn't just bad, it is terrible.

I would love to be the eternal unbridled Larry Kudlow-like optimist and paint a rosy picture of this economy as the "greatest story never told", but I can't.  The news flow is absolutely terrible.  And, I'd love to believe that when the market rallies on bad news that it marks the end of the fall, but I don't believe that either.  And, I'd love to believe in Santa Claus and Christmas rallies, but I don't think that this going to work either.

This past week gave us 3 reasons why the market is going lower.

One, the unemployment numbers show that the economy is falling off of a cliff in a way not seen since the Great Depression.  (See my article here).  The economy is in a downward spiral. 

Two, massive losses at institutions such as Harvard (see my article here) indicate that our institutions and pension funds are suffering, and that they will need to sell out of their investments at every chance they get.  These funds are the ones driving the economy, not the individual investor.  So, every rise will be met by a sale.

Three, the big three bailout is a lose-lose proposition.  If there is a bailout, the additional monies and debt that our country is taking on will lead the Dow to 7000.  If there is no bailout, the effect of losing these industries will take us to 6000.  After their first appearance the Hill, I suggested that the automakers need to fail (see article here).  Now, I just see it as a sickening, saddening no-win situation.

I wish that the news flow couldn't get worse, but I know that it can.  This isn't going to be a V-shaped recovery.  We are looking at an L in the best case scenario.

I'm taking Sam Cass's article on Bill Gross and this frigging scary as hell article by Sol Nasisi about the Great Depression to heart and heading for the hills, even if it means selling at these low levels.

I may be wrong, but I will sleep better.

 

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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