Monday, 2 March 2009

Commentary: Your source for news, commentary, and stock info

It's Ugly Out There

So far today, it's been ugly!!! The bear market is growling viciously today. People who are holding long positions are getting decimated, and I am sorry to say,"It's going to continue." The number of pundits saying it was a bottom in November just look foolish right now. The severity of this bear is like nothing anything of these so-called Wall Street veterans have seen before. That's because this is a Supercycle degree bear market (look it up). And a bear market of this degree is followed by depression (period!). With that said, there will be large countertrend rallies within this bear market. The rallies are designed into fooling people to get back in, only for the rally to fail, and the market plunges to new lows. I think the Dow Jones will end this bear market in the 2500-3000 range (maybe lower, if it is really bad). But between now and then, I think we will see some countertrend rallies that only the nimble should participate in. We have been going down since October 10, 2007 (511 days including today), and the market has declined over 50%. This an unprecedented fall in the stock market, but this current decline is getting long in tooth, and we will see a significant bounce in the next 4-8 weeks. To be a a successful investor/trader you inherently have to be a contrarian. While everyone else is jumping out of windows, panicking, and selling their stocks, you have to be able to go against the crowd and calmly buy them up. And when they rise and get to overvalued levels and everybody is trying to buy them hand-over-fist, you have to sell them all the want. It's that simple. (But people don't like simple.)

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