Market Outlook: We Are at an Important Inflection Point

We are at a very important inflection point. Let me explain. The Dow reached a low on March 9, 2009 at 6,547.05. The Dow then rallied to a high on August 13, 2009 at 9,398.19. This is a 44% rally within a 5 month time frame.

Now I am going to take you back to the crash that marked the beginning of the Great Depression in 1929.

The Dow reached a low on November 13, 1929 at 198.69. The Dow then rallied to a high on April 17, 1930 at 294.07. This is a 48% rally within 5 months time frame.

Notice the similarity? Please understand that I am not trying to draw any correlation or implying that we are in another Great Depression. The purpose of this is for investors to be aware of the market barometer. Investors faced the same question back then - "Is this the return of good time?" and thus they piled into the market. Soon after, their hard earned money was lost. Please look at the charts below for reference.

Great Depression		Current Recession
August 13, 2009	9398.19	April 17, 1930	294.07
March 9, 2009	6547.05	November 13, 1929	198.69
Gain	43.5%	Gain	48.0%
Duration	157 Days or 5 months	Duration	155 Days or 5 months

Before deploying your hard earned money, please be aware of the risk in investing. As for myself, I have a stake in the market (mostly cash) but due to the tremendous gain in the previous months, I will be protecting those gains and not trying to grow my capital.

Comments

[QuasiYoda:]

Somebody please ban the previous poster for spamming incessantly.

Yes, I have begun to short last week but will begin to exit my short positions if I don't see confirmation this week . . . by Tuesday.

Aug 16 07:06 PM

[dcb:]

he has been banned, and continues to post with other names. I don't live in california so am unable to go visit him and break his legs. all you can do is report him for abuse. clearly he needs the crap beaten out of him


On Aug 16 07:06 PM QuasiYoda wrote:

> Somebody please ban the previous poster for spamming incessantly.
>
>
> Yes, I have begun to short last week but will begin to exit my short
> positions if I don't see confirmation this week . . . by Tuesday.

Aug 16 07:11 PM

[dcb:]

the author makes the mistake of thinking people have piled back into stocks. what has happened is the fed with all their give aways and cheap money has allowed wall street firms to lever up, and given goldman sachs a trading monopoly on the NYSE. read up some sero hedge data about where the money comes from. it ain't money market funds. bonds have gotten real money flows, not the market!!!

Aug 16 07:13 PM

[dcb:]

data found from zero hedge:
a $2.7 trillion move in equities was accompanied by a less than $400 billion reduction in Money Market accounts!

Where, may we ask, did the balance of $2.3 trillion in purchasing power come from? Why the Federal Reserve of course, which directly and indirectly subsidized U.S. banks (and foreign ones through liquidity swaps) for roughly that amount. Apparently these banks promptly went on a buying spree to raise the all important equity market

Aug 16 08:39 PM

[whidbey:]

dcd is correct, this rally is a creature of the Fed Swamp and it will go and grow because the problems in the banks, Comm RE, credit cards and housing are not over, not even to act II. The man is right caution is due and we should thank him for his efforts.

Aug 16 08:49 PM

[Dirtnap:]

Agree with dcb and whidbey. Even though this growth is artificial, the new bubble has to burst eventually. I rode out this wave from March, but I am too nervous to hang on any longer. I have been quietly making an exit from my long position, and I would advise all others to consider the same.

Aug 17 12:44 AM

[YoYoMama:]

SA needs to track the IP address of his registration. They can then block his access to the site on the server. That way, he can not only not register, but he will not have access to the site whatsoever.


On Aug 16 07:11 PM dcb wrote:

> he has been banned, and continues to post with other names. I don't
> live in california so am unable to go visit him and break his legs.
> all you can do is report him for abuse. clearly he needs the crap
> beaten out of him

Aug 17 09:05 AM