Sunday, 2 August 2009

Weekly Wrap: Your source for stock, stock market, and stocks info

Weekly Wrap: Well another up week for the market. Thursday saw the market make another huge push. The S&P500 is very close to breaking the 1000 level. This is right in line with my forecast for this current bear market rally. I made a previous post stating that I think the S&P500 would get to 1000-1100. It seems as though it is right on track for reaching it this fall. Now there is a lot of debate about whether this is a bear market rally or a new bull market. I would like to emphasize that it really shouldn’t be all that important to you if it is or if it isn’t? What is important is how you position yourself for whatever outcome transpires. Having a plan ready and being able to react is what is most important. I am one of the bears patiently waiting for the next leg down in the market, but I actually have all long positions because I can see the trend of the market is still up. Separating your trading/investing from your personal opinions is an essential skill to successfully making money and keeping yourself out of harm’s way if you are wrong. Fundamentally, I am very bearish on the market and the economy. I don’t see a whole lot of impetus for this “green shoots” rally that every is getting so excited about. To me, the economic data that is coming out portends to more economic malaise into 2010 or even 2011. I just don’t see the signs of improvement that some of the bulls see when they look at these economic statistics. I believe a lot of what they are seeing is based on hope. I base my opinion on facts and with a little bit of human psychology and sociology thrown in. This downturn in social mood is of a larger degree than I think most people realize. So the concurrent activity in the economy should mirror this turn down in social mood, and the one preeminent gauge of this social mood is the stock market. One could postulate that the stock market is a proxy for the general mood of society. So, the stock market is now rising; hence, the improvement in consumer sentiment numbers and somewhat less than horrible economic numbers. If you want to know where society is going before is actually gets there, the stock market should be one of the first places you look. When world markets peaked in 2007 and turned down, did anyone see the potential aftermath that occurred? The stock market did. That’s why it peaked and turned down, while everything was great and there weren’t any problems.

No comments: