Archive for April, 2009

Well, yesterday continues a strong performance for the stock market.  Remember we are still focusing on one question.  Was the low in the stock market in March the bottom of the bear market and the start of a new bull market or was the stock market rally that started in March nothing more than a bear market rally?  This is one of the most important questions to continue exploring at this juncture. There are huge risks for either answer. 

If you are not properly invested and this is the new bull market, then you are really missing out on recouping your losses.  If this is nothing more than a bear market rally, then the potential for extreme losses for stock market investors still lie ahead. 

For those of you who read my daily outlook blog, you know that I believe this is a bear market rally and a great opportunity for those who are heavily invested in stock to take advantage of this big move in the market and reduce your risk by selling stocks or stock mutual funds. 

As I started writing last week, my indicators are flashing caution right now and suggest that the risk continues to climb for anyone invested in stocks.  The market is truly ignoring some negative items.  Growth for the economy was announced yesterday much worse than expected.  We had -6.1% growth last quarter and the growth numbers for the first quarter were revised and reflect a worse first quarter than originally reported.  The last 6 months were the worst since 1958.

Foreclosures are climbing.  Swine flu should now be on every investor’s radar as this is just about to be classified as a pandemic.  The first of what I believe will be two automakers declared bankruptcy this morning.  The Government is going to be selling 71 billion dollars worth of government securities next week (read: printing money).  Finally, unemployment continues to weaken as evidenced in this morning’s new weekly jobless claim numbers (another record). 

All of this is occurring, and the consumer confidence number increased by 50% with the highest read since November 2005?  Are you kidding me?  As I have written many times, there is a great deal of evidence that exists that economic numbers are doctored.  There is just no plausible explanation for a rise by that much during a time with this much negativity.  However, keep in mind, we just “celebrated” (it certainly seems that way) President Obama’s 100th day in office.  It sure would be fitting for the stock market to have made money in his first 100 days as well as a huge rise in consumer confidence due to everything he has done in office.  HMMMMM…I follow this data very closely and it doesn’t add up.  It looks more and more like an organized PR campaign.  Let’s just all hold hands and believe there is no risk and the government will take care of everything.  If you are not paying attention to what is occurring out in front and behind the scenes please start doing so. 

Agree or disagree and think I am a conspiracy nut, things don’t add up.  I am just writing what I am seeing and staying away from the kool-aid that is being consumed in mass quantities.  For now, be careful with your risk.

with your risk.

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The bottom line is that we are in the eye of the storm right now and the foreclosure situation could potentially fall back into crisis mode.  Now, I think that we can handle it a little better this time around, however, this is a risk that no one is anticipating.  I guess the thought is that the Obama administration has this handled.  The truth is that we don’t have solutions for this problem. We only have ways to make the situation more tolerable. 





I have been writing over the past few days about what Wall Street is not really paying attention to right now.  I made the same argument back in late 2006 and early 2007 that there was a category 5 financial storm brewing and Wall Street is ignoring the risk.  Well, there is still yet another category 5 storm brewing. 

The storm consists of many components.  Yesterday, I wrote about unemployment.  Today, the root of the whole financial crisis could potentially be raising its ugly head again.  Now, I want to keep this very general so that you can see the risk. This is a discussion that can even get over my head at times. 

Let’s start at the beginning, where all of this started.  The mortgage industry became greedy and gave mortgages to millions of people who could not really afford them.  Upfront, these mortgages seemed affordable.  However, something very horrible happened and the interest rate and the payments changed.  The mortgage “re-set.” It changed in such a way that people could not afford to keep their homes.  They couldn’t refinance and the home went into foreclosure.

The foreclosure crisis is causing all of the problems.  So, in order to get past the credit crisis, we need to get past the foreclosure problem.  Well, unfortunately, between the second half of 2007 and 2008, hundreds of billions of dollars worth of these mortgages were re-set, causing countless numbers of people to lose their homes.  Then we had a slowdown in the number of re-sets. At this time, the re-sets are starting back up again.  Take a look at this chart:


You can see all of the green at the beginning of the chart.  That is the escalating number of mortgages that re-set.  Then you can see it died down again.  Well, different types of mortgages are facing re-sets.  Unfortunately, it appears to be a larger problem.  Look at how high that graph spikes!

The bottom line is that we are in the eye of the storm right now and the foreclosure situation could potentially fall back into crisis mode.  Now, I think that we can handle it a little better this time around, however, this is a risk that no one is anticipating.  I guess the thought is that the Obama administration has this handled.  The truth is that we don’t have solutions for this problem. We only have ways to make the situation more tolerable.

I don’t think we are out of the woods yet.  The determining factor is the foreclosure situation and it appears that we still have a ways to go. The good news is that we might get a fairly long period of time where things start to look better.  For those mortgages that go into foreclosure, it will take 6 months or so to work themselves into the system.

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The bottom line:  As long as the ranks of the unemployed continue to increase, the damage to the economy will worsen.  As a result, risk for a continuing bear market remains high. 

Yesterday, I wrote about a discussion that I had with a friend of mine that manages money. 

My friend completely disagrees with me regarding my cautious outlook.  His argument is that there are a lot of risks in the stock market.  However, the market is comfortable with that risk.  In other words, we have seen the full extent of the risk.  If you think about it, it is the big surprises that cause the large declines in the market.

Although I agree with that opinion, I don’t agree that the worst is behind us.  We have to consider the problems that are brewing on the horizon that have yet to become a full blown problem. 

I wrote that the stock market can get comfortable with the risk that can be seen.  However, at the same time, there can be a category 5 financial storm brewing out in the distance that has yet to arrive.  So, I wanted to write about what I feel makes up that category 5 financial storm.  Today, I will talk about unemployment.

I really do feel that this is the biggest symptom of the financial crisis that can cause the greatest problem.  There are a few ways to look at unemployment.  We can look at the monthly report which shows us the unemployment report for the past month.   You have to be careful deriving to much from this report.  The monthly unemployment report is really telling you old news.  Those unemployment numbers are a result of weak economic conditions that have already occurred. In fact, an economy will start to recover well before the employment situation gets any better.

Then we can look at the weekly jobless claims.  This gives you real-time information showing how many people are receiving unemployment benefits from the Government as well as how many filed first time claims the week before.  This weekly number continues to climb and it seems that we continue to see weekly records.  Currently, over 6 million people are claiming unemployment benefits.

The Government gives their “version” of the unemployment number each month.  It is grossly understated.  It doesn’t give you an accurate look at unemployment.  It doesn’t account for so many people who have fallen out of the system.  Plus, they include an estimate of how many people that they think received jobs that the report didn’t cover. 

The real number according to the analysts who really follow the real statistics is closer to 19%.  Keep in mind that during the Great Depression the number was 25%. 

I believe that the unemployment situation in America has gone past the point that it can be easily fixed.  Thus this unemployment problem could be around a lot longer than anyone expects.  It is like cancer.  The longer the cancer is allowed to be a problem the more damage is done.  The bigger problem is that the Government is doing very little to fix the unemployment problem which just exacerbates the problem. 

The bottom line:  As long as the ranks of the unemployed continue to increase, the damage to the economy will worsen.  As a result, risk for a continuing bear market remains high.  Tomorrow, I will go over the second reason.

Market update – The stock market is grappling over the potential of a real problem with the swine flu.  It is way too early to determine how big of a problem this will become. However, experts say that timing-wise we are due to experience a pandemic.  It warrants keeping a close eye on this one.

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I had a debate with a fellow investment manager about his take on the market. He completely disagrees with me regarding my outlook.  His argument is that there are a lot of risks in the market.  However, the market is comfortable with that risk.  In other words, we have seen the full extent of the risk.  If you think about it, it is the big surprises that cause the large declines in the market.

Although I agree with that opinion, I don’t agree that the worst is behind us.  We have to consider the problems that are brewing on the horizon that have yet to become a full blown problem.  I remember writing in my client newsletters a few years ago about the category 5 financial hurricane that is sitting out in the distance.   I wrote that the market sees the risk of the housing bubble.  However, there is nothing that is ruining the party – so why worry?

Then the Bear Sterns collapse occurred and the market woke up to that category 5 financial hurricane that was heading for the United States financial markets.  Of course, Swine Flu was never on my radar of financial risks.  In fact, up until Saturday, I had never even heard of it.  So is a global epidemic of Swine Flu the new worry?  

Well, it is always tough to tell what is really going on and if this is a real problem.  The health “experts”, much like economists, are positively optimistic and downplaying the possibility of an epidemic forming.  President Obama addressed the scare this morning.  “This is obviously a cause for concern and requires a heightened state of alert,” Obama said, “but it’s not a cause for alarm.”   We are on a heightened state of alert and there is no cause for alarm?  What did he say?

Typically, these types of stories cause a negative reaction in the market.  However, it doesn’t develop into a full blown risk for investors.  However, if this were to become something much greater, then it would probably become a problem for investors.  For now, it is too early to tell.

Price Levels – Remember we always watch price levels in the S&P 500 to determine how much risk is out there for investors.  Friday, although a good ending to the week, the stock market was having a tough time getting above 875.  I would dare to say in the short-term it would be tough to be to optimistic until the S&P 500 can close a market day above 875.  This is a new week and let’s see what clues the market brings. 

TOMORROW:   What does my current Category 5 financial hurricane look like?  We will talk about it.


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Mr. Market does as much as possible to frustrate the masses who manage money.  Wednesday was a very bearish day on the stock market.  The market was initially down, then it had a strong rally and was up, and then declined into the close of the market putting in a loss for the day.  Yesterday, it did just the opposite.  Well, go figure! 

We don’t have much in the way of information to go on and are somewhat stuck in neutral.  One indicator you can look at is the volume of buying and the volume of selling.  When you see a strong move in the stock market like you did today, you want to see some strong volume.  Volume was pretty weak today.  Then again the volume during this entire stock market rally has not been very impressive. 

There are some pretty interesting pieces of information to look at regarding the overall market.  The earnings news has been decent and the market hasn’t really responded as positively as I would have thought.  There was one other note to make today.  News came out after the bell that Chrysler could file for bankruptcy protection.  If things don’t go right for the automaker, there would be a good chance that Chrysler could be liquidated.  That would be a loss of 66,000 jobs and the loss of an American institution.  I would think that would be a negative on the market.

For me, I will stick with my original analysis.  I think we are ending a bear market rally.  I could be incredibly wrong.  If that analysis is correct, then the bear market would come back with a vengeance.

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I know many people who have an extremely positive outlook on things.  Believe it or not, I would consider myself one of those people even though just about everything that I write is negative.   Lately, those positive outlook friends of mine have made the comment that it has been tough to be positive lately.  I would now say they are realistically trying to be optimistic.

The economic news that came out this morning is the problem.  The number of people who filed for unemployment benefits last week rose to 640,000.  Currently there are 6.13 million people receiving claims and those are the only ones that we know are unemployed.   I would argue that there are millions of people who have simply dropped out of the system and are not being counted.

According to Shadow Stats who calculates the real percentage of people unemployed, it is not this bogus number that the government reports.  The number is more like 19% unemployed.  The biggest risk that investors and this economy face is that the politicians are doing nothing to fix the unemployment problem.  Sure, they passed a stimulus package that will create construction jobs (for the most part) in the future.  However, there is nothing today.  If you had cancer, you would treat it immediately and not wait a year or so to give the cancer chemo.  This economy has cancer and there is no chemo being applied.

Yesterday, the market had a bearish day.  It started off negative, then put in a very solid advance and was positive by almost 1.5%, and then declined during the last hour and ended with a negative return.  That is what weak markets will do.   I do believe that it supports the notion that a change of character is taking place. As I write, the S&P 500 is sitting a little low around that important 841 price level.  So, the market results could be very telling as we see how the market reacts to the selling pressure.

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The stock market rebounded nicely this morning and is back over 841.  This could potentially be a tough 2 to 3 weeks for the stock market.  We really need to watch closely so that we can stay on top of the main question concerning the market right now. Was the end of the bear market in March and this is the start of a good time to be in stocks or is this stock market rally that started 6 weeks ago nothing more than a typical “bear market” rally?  If it is the latter, you really need to consider reducing risk if you have not already done so.

It always comes back to the banks.  The tech stocks were the poster children of the last bear market and the banks and financial services companies are the poster children for this bear market.  As I wrote this morning in my Prudent Money Blog, the Government actions of wanting to assume more and more ownership in the banks is making the markets nervous.

The upcoming release of the stress test for the banking system really has the markets on edge.  Hal Turner wrote over the weekend that the stress test has been leaked and the results are horrible.  Who knows if that is a rumor or not?  The bottom line risk is getting high and we need to watch those price levels of the market. 

So we have had one very bad day on Monday followed by a good day on Tuesday.  Today will probably tell us in the short-run what the next few weeks will look like.




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Ok, one bad day in the market does not mean the bear market rally is over.  However, it is evidence that the problems the stock market has tried to ignore over the past 6 weeks are alive and well.  The market has cheered and gone up on news that the big banks are making money.  Many of the big banks have surprised analysts by turning a profit.

It makes you a little suspicious when banks were on the verge of collapse just months ago and now they are profitable. Hmmmmmm.  Well, it is actually easy to explain and Bank of America illustrated this today.  It is not about quantity of earnings for banks but quality of earnings.  The quality of these earnings is as bad as always.  Don’t forget that many of the accounting rules were conveniently changed prior to the earnings season, allowing for the big banks to make their earnings look better.

Bank of America had good numbers today.  However, they also announced that they have 13.5 billion dollars reserved for losses from toxic debt.  Wait, I am confused. Things are good and we expect 13 plus billion dollars in losses?  It is hocus pocus accounting and investors are just gullible enough to buy up these shares of bank stocks.  For anyone who bought Bank of America stock lately, I am sure the 20% plus decline today felt pretty painful.

Another concern for the market is the stress testing of banks.  On Wednesday, I will be writing about that subject.

So, after a day like today, let’s look at price levels of the S&P 500.   As a review, think of price levels as mile markers.  If you were traveling, you can get a sense of your success in reaching your destination by passing certain mile markers.  However, if you are not seeing the mile markers, then that could be a sign that you are losing ground and falling behind or even getting lost. 

It is no different for the S&P 500.  The goal is to get back to where we were when this whole thing started.  In order to do so, the S&P 500 needs to prove to investors that it has the ability to get back on the right road and make headway without getting lost again.  We use price levels (the price of the S&P 500 at the close of each business day) as a way of assessing whether or not the market looks like it is on the road to recovery.  If you are positive or bullish on the market, you want the S&P 500 to stay above the price level of 825.  Between 825 and 800 would warrant caution.  Below 800 is negative.

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Over the weekend, I received an e-mail from a listener in Japan.  He listens to Prudent Money via the daily podcasts.  He was asking me about an investment trading strategy that he had some success using.  He asked me if it were a zero sum game if he was making money while everyone else lost. 

My answer to him was that whenever someone loses money, there is someone who makes money.  When the market was going down last year, there was someone making money.  With any investment trade, you have a winner and a loser.  You just need to have a strategy.  What most investors think of as a strategy might really end up being a disaster.  This listener has gone out and learned an investment strategy.  Buying and holding and doing nothing is a strategy.  However, it is not a good one considering this particular environment. 

When I speak of this particular environment, I am talking about the new environment which is a permanent change.  I truly believe that we will never go back to the old days (pre-2008) when it comes to investing.  If I am correct in my thinking, those who do not adapt to this new environment could be in for some real heartache.

Well, consider the environment and tell me how this enormous amount of debt is going to go away and things get back to normal.  Also consider that the Federal Government seems to be set on continuing to add to the debt on a daily basis with more and more government spending.  The following excerpt is from Michael Panzner’s blog Financial Armageddon.

Even under the best of economic circumstances, tax season is a tense time for American households. The number of hours we collectively spend working on our returns is probably a lot more than government agencies claim.

The burden in financial terms is even greater: A recent independent survey found that the average American’s total federal, state and local tax bill roughly equals his or her entire earnings from January 1 up until right before tax day.

Now imagine that tax bill doubling over time.

In recent years, the federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush’s administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? “You can pay me now or you can pay me later, with interest.”

To help put things in perspective, the Peterson Foundation calculated the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government.

If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country.

So, this is the environment that we are dealt and it is full of risk.  Investors need to learn a strategy or have someone manage money that understands the concept of strategy and investing versus buying and holding.

Market Update

As I wrote last week, my indicators are sending a warning sign right now.  The markets are having a very tough time this morning (at the time of writing).  This is the worst morning opening that we have encountered in a while.  It is important to look for a change of character in the market.  This is pre-mature and purely on gut feeling.  I think that we are seeing a change of character right now. The bear might be back.  


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There is not a whole lot to add in today’s blog.  The trend or direction of the stock market has been stuck between some important (at least in the short-term) price levels.  Remember that price levels are nothing more than mile markers.  If you were traveling, you would look for mile markers.  If you are passing up the right mile markers, you know that you are on the right track.  If you are passing up the wrong mile markers, you are probably going the wrong way.  So, we look at mile markers for the stock market to see if we are heading in the right direction, which would be up.

So a stock market close (the price level at the end of the day) of 875 or greater would be short-term positive.  A stock market close below 825 and above 800 would call for some caution.  A stock market close below 800 could be the start of something negative for the stock market.

Don’t forget the main questions that we are trying to answer.  Is the bear market over?  Has a new bull market started?  Are we just in a bear market rally and days or weeks from turning back into a negative bear market where the stock market could experience steep losses? 

We are also always looking at what direction the market is going in the short-term, the medium-term, and the long-term.  Right now, this is how I see it stacking up.

Short-term – Positive or bullish

Medium-term – Negative or bearish

Long-term – Negative or bearish

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Yesterday, the market struggled throughout the day until the Beige Report on economic activity was delivered early afternoon.  The news was that it looked like the economy might be stabilizing and the word out of Washington was that the recession might be over sooner than we think.


Well, that day of struggle for the stock market turned into a nice day with the market finishing with a strong return.  This is pretty typical for a bear market/recession.  If there is any glimmer of good news, the recession is declared to be ending. 


An economic decline does not fall in a straight line.  You will see really bad news, maybe some good news every once in a while, and then a period where the news might not be so bad.  It is tough to see the light at the end of the tunnel when analysts state that the economic news, although still very negative, is “not as bad” as months before.


So, we get on that roller coaster.  At the risk of being a “doom and gloomer”, I think that we need to take a look at the real estate markets and get a fresh dose of reality.  I don’t think that anything is going to recover until we take care of this foreclosure crisis. 


Even though the Obama Administration has rolled out an enormous homeowner bail-out program and banks such as JP Morgan, Morgan Stanley, Citigroup, and Bank of America have suspended foreclosure proceedings in some states, foreclosures were still up dramatically in February by 30%.  Approximately 291,000 homes were added to foreclosure ranks.  


The idea of the Government fixing the foreclosure problem remains nothing more than an illusion.   In addition, John Mauldin reported in his weekly newsletter that there are in the neighborhood of 600,000 properties that banks have repossessed but not even put on the market.  In other words, there are many foreclosures that are not even showing up in the numbers.


The foreclosure crisis is THE problem for the credit markets which is the problem for the banks which is the problem for the stock market which is the problem for the economy.  It all ties together.  This is a worldwide cancer that is still making the global economy sick. 


My concern is that because the market is up over the past 5 weeks and all of the economic cheerleaders are returning to the stage, that you will declare that you will not take risk seriously with your investments.  You need to know that risk is still very high in the markets.









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I typically post in the morning and write about the prior day’s market action in addition to the morning economic news.  I am writing this Tuesday night because I am speaking at a conference in Fort Worth Wednesday morning, which will fill most of my morning.


So, Wednesday we will get another look at inflation numbers with the Consumer Price Index report.  Tuesday we saw the Producer Price Report numbers.  I wrote about them in my blog.  The Consumer Price Index tells what is happening to prices (rising or falling) at the consumer level.  It will be interesting to see if the CPI numbers look as deflationary as the Producers Price Report.


Tuesday, it wasn’t a very pretty day on Wall Street.  The big questions are:


–  Is this the start of a new bull market and the bear market is over? 

–  Is this just a bear market rally?

–  If it is a bear market rally, when will it be done and how bad will the next part of the bear market be for investors?


Daily price levels give us clues about the future direction of the market.  Remember price levels are like road markers.  They tell us if we are headed in the right direction or not.   My opinion is that we are in a bear market rally and this bear market rally is nearing the end.


We are always looking at the CLOSING price level of the S&P 500.  Tuesday the S&P 500 closed on an important price level of 841.  It will be interesting to see what happens from here.  We might be getting ready to go down to 800 and “test” that price level.  If the market can stay above that level, that would be a positive sign.  If not, look out below.  We will have to wait to see what Wednesday brings.



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To purchase Bob’s new book Deceptive Money or to review information pertaining to the book click here.

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As I was driving into work this morning, I was listening to the latest economic reports on CNBC (financial news television via satellite).  The latest report on producer prices showed the greatest year over year decline since 1950.  One announcer proclaimed that this was good news, that inflation is not a problem.  Well, that is good news that inflation is not a problem.  With the Government printing money as fast as it can, huge inflationary concerns should be in the back of everyone’s mind.  However, there is equally bad news in that these numbers are showing that deflation is a real problem. 

I have argued all along that deflation is our biggest battle right now.   If we were facing inflation, prices would be rising.  Remember when gas prices were over $4 last year?  That was definitely inflation.  The exact opposite is true of deflation.  In a deflationary recession, the economy is not growing and prices of everything are falling.  The producer price index is an economic report that shows the prices at the producer level (before it gets to the consumer) either rising or falling.  Thus far, businesses are unable to raise prices.

The biggest concern with deflation is how tough it is to eliminate.  Deflation is a lot like cancer.  Once a person gets cancer, it is tough to get rid of it.  Japan suffered through deflation for over a decade.  We also saw severe deflation during the 1930’s.   So, falling prices and lack of inflation is not good news.  I would prefer to see prices rising. 

Deflation is typically brought on by a debt crisis.  All of the symptoms and characteristics are present today.  This is also why I believe that gold has fallen over the past few months to below $900 an ounce.   I think that all of the gold and inflation talk is very premature. 

As far as the markets…they continue to march upwards.  They are showing some weakness this morning, which is to be expected following such a strong showing over the last 5 weeks.  What happens when this market faces some weakness will be telling of the overall strength of this recent bear market rally.  My indicators are showing that this bear market rally is close to being over.

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President Obama stated the other day that he sees glimmers of hope.  At the same time he was getting optimistic about things, another very disturbing piece of news was released.  In fact, this was news that did not get much attention…and it should.


Moody’s rating services assigned a negative rating to ALL local governments in the United States.  That means the rating services feels like the entire local government financial system is in trouble.  Once something like this happens, it is very hard for municipalities to get financing.  As it is, local governments and even most states are having serious financial problems.


There comes a point where the Federal Government cannot bail out everyone.  The problem is that the financial crisis has caused cracks in the foundation.  As a result, this isn’t just like any old recession where the worst is over and we start growing out of it.  Unfortunately, I think that it is going to take a very long time to get out of this one.


This is very significant that Moody’s would assign a negative rating to every single local government.  This just underscores the huge challenges that the Obama Administration has to face.  There comes a point where it is going to be impossible to spend our way out of this mess.  These types of problems act as a noose around the neck of the economy and the markets.  It is just tough to start recovering when facing these challenges.  As a result, the risk in the stock market remains very high. 


With that being said, the stock market did have a stellar week.  The S&P 500 finished over 850 and thus far has successfully finished above the price levels that we have been writing about.  As a review, think of price levels as road markers.  If you were traveling, you can get a sense of your success in reaching your destination by passing certain road markers.  However, if you are not seeing the road markers, then that could be a sign that you are losing ground and falling behind or even getting lost. 


It is no different for the S&P 500.  The goal is to get back to where we were when this whole thing started.  In order to do so, the S&P 500 needs to prove to investors that it has the ability to get back on the right road and make headway without getting lost again.  So, we use price levels (the price of the S&P 500 at the close of business each day) as a way of assessing whether or not the market looks like it is on the road to recovery. 


So, let’s look at some new price levels.  The next price levels for the S&P 500 to close above in order to remain positive would be 875, 900 and then 945.  If the S&P 500 closes below 825 to 800 then that could be an indication that the stock market is not on the right road to recovery and simply taking a short-cut that is leading to a dead end. 


Although the last 5 weeks have been positive, there is one fly in the ointment.  There are many technical indicators (other road markers) that I follow and use to help me figure out the future direction of the stock market.  One indicator that I follow is showing that this bear market rally might be in its final stages.  Could it be wrong?  Yes, it could be wrong if we actually have started a brand new bull market.  Although anything is possible, I would think that a brand new bull market is a low probability event. 





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