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Wall Street Breakfast: Must-Know News [View article]
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Your "bear market bounce" comment is very correct. We will rally (rather than bounce) when investors start to regain confidence in corporate balance sheets and anticipate that the bottom of the recession is within six months. Neither is close at this time. There is strong support in the DJIA 7100 - 7300 area (7286.77 bottom on 10/9/2008 and 7161.15 bottom on 10/27/1997). If we go below 7000 on the Dow, there is no quide to where the bottom will be, because the next chart support is at 2365.1 (bottom of 10/11/1990). Collapse of markets to 1990 lows can only happen in the event of a depression that would not be called "The Great Depression", but would be "The Greatest Depression".
I think that fiscal and monetary policy will succeed in preventing "The Greatest Depression". Thus, nominal DJIA in the 2000's is very unlikely. However, if we ultimately inflate our way out of the trough, how low will the Dow go in inflation adjusted terms?
Will the Bear Market Rear Its Head This Week? [View article]