xsuddensam

Is the Dow's Worst Yet to Come?

In light of all the uncertainty, I would think that the prudent course of action would be to sit it out in cash. The trillions of dollars in the murky CDS market could be the next shoe to drop. A troubling sign is the current talk of the government providing liquidity to the insurance industry which may have its fingers in credit default swaps.

Commercial real estate loan defaults are also a serious consideration. Drive around your town or city and count the number of new commercial for lease signs. Where I live, long established furniture dealers, restaurants and other small businesses are closing. The number of vacancies in your local mall will give you a good idea of how the local economy is doing.

Relying on charts for a signal to jump into the market is not real smart since it's the economy which ultimately drives the stock market.