New Month
Thankfully, or perhaps mercifully, January is over. Not our best month but we have had worse. There is much to be concerned about here with a weakening economy. If the stock market is a leading indicator it tells us we have a lot to be concerned about.
Typically markets correct about 50% of their previous moves. E.g., the bear of 2000-03 on average gave back 50%. The bulll of 1982-1999 fave back 50%. If this 2003-07 bull market gives up half, the target is 10,800, or another 15% lower. Maybe not so bad but if that happens I for one would like to make money in that, not lose more. Officially I am bearish on the outlook from here. As 50% corrections go, it should be noted that the market has rallied back to almost exactly 50% of the decline. I think that the market will sell off and begin to retest the lows soon - days or weeks from now. If they hold, we'll reassess. If they fade further, our cash and gold positions will help. But they might not be enough. In the meantime, I'll be thinking about short ETF's and how they can help us. Enjoy the weekend.
Typically markets correct about 50% of their previous moves. E.g., the bear of 2000-03 on average gave back 50%. The bulll of 1982-1999 fave back 50%. If this 2003-07 bull market gives up half, the target is 10,800, or another 15% lower. Maybe not so bad but if that happens I for one would like to make money in that, not lose more. Officially I am bearish on the outlook from here. As 50% corrections go, it should be noted that the market has rallied back to almost exactly 50% of the decline. I think that the market will sell off and begin to retest the lows soon - days or weeks from now. If they hold, we'll reassess. If they fade further, our cash and gold positions will help. But they might not be enough. In the meantime, I'll be thinking about short ETF's and how they can help us. Enjoy the weekend.
posted by David Geller at 4:22 PM
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