Goldman's Recession Call: A Good Sign?

Yesterday morning the mortgage refinancing index rose dramatically (53.9%). I think a lot of people thought that that was a very good sign of health. Banks were giving new loans, and people were qualifying for them. Other MBA indices were up also. Perhaps that is one of the reasons the markets opened higher? Then Goldman Sachs (GS) cried wolf.

Certainly we have all seen the specter of a looming recession. All of us are wondering how bad it will be (or if it will be). Does GS's stating it as a purported definite make it true now? Or does it just mean the markets are getting close to a short term turning point (and GS wants to wring the last iota of downside out of this particular downside move)?

GS is known to be a great speculator. Sometimes they are even more than this. They have been fined recently by the SEC for manipulating the markets. We all saw how neatly they managed the credit crisis woes through speculation. Is this another instance of GS trying to make a bigger profit?

On the weekly SPY chart the only support we have immediately below us is at about 137.80 (the far edge was 137.33). That's about where the market is now. Are we in for a bounce? Certainly Fed Governor Poole's comments would indicate that we probably should be. Stocks have sold off dramatically lately. At the very least a small recovery upside move would seem warranted. The Bespoke Group mentioned that the NASDAQ has been lower for 8 days in a row. The odds say we are due for a rebound upward. Is GS trying to start a free-fall instead?

The timing of their news release makes it look that way. Companies like GS do well when everyone else panics according to their schedule. Is the market going to play their game? Or will it bounce? I am inclined to think it will manage to stay where it is but may or may not bounce depending on the retail data due out this morning. I think a bad AA result has already been accounted for with yesterday's trading. Barring a big surprise there, AA's result shouldn't matter (or be a surprise).

Perhaps GS 's cry of recession means we are nearing at least a short term bottom that GS wants to profit from more than they normally would. Bernanke speaks today. It may be a good idea to wait to hear his comments before acting on the GS advice. At least he has no desire to separate us from our money.