CHESSNOID

I think it is great when the market goes up.  We have been down 8 trading days in a row with over 20% losses in all 3 indexes (DOW, Nasdaq, S&P 500).  We were bound to have an up day or two.  Just like playing blackjack, sooner or later you get a good hand dealt.  Unfortunately, the stock market is influenced by the economy. More so lately than before.

Fundamentally, the global action as well as the US action taken to calm the markets do not actually fix the problem.  They only deal with the symptoms of the problem. All the experts talk about the credit crunch and that  there is no liquidity out there.  The Feds have already injected over a trillion dollars just this year, have auctioned billions of treasuries, and lowered interest rates coming close to 0%.  The problem lies in the housing market bust, where we have record foreclosures still on the rise.  That is where the origin of the problem is and it still has not been dealt with.  Experts are trying to save the banks, but no one wants to save their customers.  You can’t save the banks without saving their customers.  Values of homes will continue to drop simply because they are overpriced. This is turn will cause homeowners with good and bad credit to walk away because they view their homes as their biggest investment.  When an investment puts you upside down, it only makes sense to walk away.  Furthermore, with the government bailout, people will view the transaction simply a business choice and not a moral one.

Technically, the market moving averages are all still trending down.  Check out the moving averages for the 3 major indexes and see if the 5 day, 20 day, 50 day, and 200 day moving averages are pointing up, down, or flat.  This is also another good way to gauge when a good time to jump in long term.  You can read other investors analysis if you don’t know how to do it yourself or if numbers just turn you off.

We are in a bear market and  the economy is in a recession.  They didn’t come about overnight nor will they be gone in day. This rally may last a day, a week, or a month, but until the fundamentals and technicals change this looks to be a sellers market in my humble opinion.