Is it Time for a Correction to Shake Out the 'Crazies'?

At least if the market takes a correction now, it has a chance to drop hard, catch support at the breakout of the bottom pattern and regroup in 2010 for the final leg of a nice up cycle. Will the market pause for such relatively healthy reasons?

The chart says the Dow is going to 10,400 or so. The big question is will it do it now or after a fairly robust decline? NFTRH will of course be watching the dynamics unfold. Because the question above is for all the marbles.

I sent a rather involved update to subscribers Friday morning (it was the serious Gary talking, not the silly playah you sometimes see here) and part of the theme was blow off dynamics. Well, what is it going to be, blow off dynamics or something more sustainable? And by sustainable I mean mini cyclical bull market at best due to the horrid 'fundamentals' propping this burst of good tidings.

The Dow really should think about taking a correction and shaking out the crazies. Really.

Comments

[David McSwain:]

Yes! Is the answer to your title. The jobless rate, lack of investment and tight credit make this rally unsustainable. I believe many of the improved balance sheets of many companies have not come from real growth. The balance sheets and earnings simply look better because they have laid off workers, sold off assets and scaled back operations. There has been no real growth in any part of our economy since 2007.

NO GROWTH IN ANY PART OF OUR ECONOMY SINCE 2007

This current rally is the result of spin by our government and media. We lose 300,000 jobs and they say “Hell that’s great!! We were expecting to lose 400,000 jobs…” What kid of nonsense is this? When did ‘not as bad as expected news’ become good news? I would tell you the answer, but that would be an Obamination.

The market will correct. It will reflect at some point the reality of the economy. I cannot say whether it will be a slow steady decline or a crash but in either case, I predict within the next 2-3 years we will see the Dow sink to 3000.

Sep 18 10:37 AM

[Albertarocks:]

Yes! Is the answer to your title. I haven't trusted this illogical, 'magic wand induced' thrust in the markets one iota because it's never been given a chance to develop anything close to a healthy correction. The piggybankers just don't know when to quit. And I strongly suspect they're trying way too damned hard to convince us all that we're in the midst of a great bull engineered by the geniuses at the FED. Instead, in the process they're setting all of us up (on purpose probably, or else they're too stupid and to realize what they're doing) for another Titanic replay. Greed is the mother of irrationality. The unsinkable Titanic and the corporations "too big to fail" are unfortunately all going to meet at Davy Jones' Locker.

And the sad thing is that it didn't have to be this way... if the pigs could have just left things alone and let the markets do what they were designed to do... provide liquidity and funding for good corporations, not be used as the casino owned by the mafia thugs at GS and JPM

Sep 18 06:08 PM

[David Van K...:]

More sarcasm. Why? Does one have to be crazy to make money in a market that has been going up for more than 6 months? Who are the crazy ones, exactly? The ones who made money in an up market, or the ones who sat it out or shorted it?

Sep 18 08:46 PM