Last week a six week downside streak was broken. This is the longest losing streak since the Great Depresssion. All five of our signals were profitable.
11,540 tops were hit Friday, a strong resistance area. The count is still biased to the call, but the upside may soon be slowed oil price rises, or earnings.
We'll not yet offer dual trades, but recommend a tight trade to the call, noting futures and morning news should influence your decisions further.
A variety of quoted tidbits I've pulled out of my readings, all relevant to your understanding of the world economic view:
"Market intervention by the Treasury and Federal Reserve over last weekend again confounded short sellers and the markets trended upwards on strong volume. The S&P 500 and NASDAQ Composite reversed a 5 week losing streak. This looks very much like the reversal that occured in March following the Bear Sterns rescue and will likely result in a similar short term bounce. In March we were told Bear Sterns was too big to fail and now, more convincingly, the same is said of Fannie Mae and Freddie Mac. The Congress is likely to pass legislation bailing out the share and bond holders and the markets have heaved a sigh of relief. In our opinion it is another bear market rally that will ultimately fail because the underlying fundamentals have not changed.
Financial institutions have so far acknowledged only about a quarter of the losses they are ultimately expected to bear. The failure of IndyMac Bank is likely to be followed by further bank failures as home prices continue to fall and bad mortgage loans continue to accumulate. The housing market will continue to fall into next year, and possibly beyond, leaving many homeowners and ex-homeowners feeling impoverished. Energy prices will remain high although they will fall slightly as demand falls and if middle east tensions ease, but higher energy costs will hurt Detroit car makers further and sap consumer discretionary spending.
The demise of IndyMac, coming on the heels of Bear Stearns desperate sale to JP Morgan Chase, is a sure sign of the fragility of today's markets. What's needed now, more than ever, is reliable information for investors and confidence that trading can be conducted without the illegal influence of manipulation.
When an irrational panic is fueled by a sense of urgency, false rumors that must be acted on immediately and the FEAR that everyone may get out first, market integrity is threatened. It is the job of market cops to provide a measure of confidence that financial information about public companies is accurate and reliable-and when it is not, to punish those responsible.
There is a great deal of intentionally false information in the marketplace."
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