Many people have stated that I am too negative on the market, surely this is a contra indicator? Maybe? But being negative has worked since early Labor Day - Hasn't it?
This market correction is serious and its not our run of the mill correction. Usually markets have some sort of "dead cat' bounce, and you have seen a few furious rallies since, most notably in early Oct, late Oct before the election, then a late November rally, followed by an end of year rally, but the market currently stands only 500 Dow points below the November lows. So why hasn't the market rallied and stayed near higher levels? The most simplest of answers is that too many Institutions own too many bad companies at much higher levels, as soon as the market lifts, people sell to get at least even or to minimize some of their pain. There is too much over head supply of stock bought at much higher levels that investors are trading out of every time the market rallies, this coupled with forced liquidation from the likes of hedge funds, retail investors, and blown out investment houses (Lehman & Bear- Just to name a few) have made any type of push higher impossible. I have not even gone into the Macro Issues that the market is currently facing.
Has anything changed?
The Geithner Plan is slowly hitting the news wires. The important facts:
1- Expansion of TALF to $1 Trillion.
2- Only certain MBS Securities are eligible - BAD NEWS!
3- All of TALF to be financed/funded through TARP - BAD NEWS!
4- Comprehensive Housing Program - No Details - BAD NEWS!
This Bailout Plan won't get through Congress. Not a chance.
Not friendly news as the market is sinking fast. Sell the News
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