Friday, December 5, 2008

Dancing Bulls And Great Recession

Cramer joined the troop! For several weeks he blasted dancing bulls, preached capital preservation and was as bearish as Jim ever can. Now he has converted. It's not Damask road, but pretty close.

What happened? Did we get great new economic reports? Nah, everything was doom and gloom, today's employment report just finishing the picture. Jim got his cool-aid from two facts: Dow didn't test 8000 level since November 24, and market up today, despite bad news. Well, first fact really means something, technical signal in a pure technical market. I actually think that November 20 was a local bottom, which might hold for a while, and mentioned it here. My main indicator was a kind of capitulation we had on Nov 20. As for the second signal... We are in a trader's market, technical one. We are trading in Dow 8000-9000 range, or 800-900 S&P range. 200 Dow points up or down, what difference does it make?

Bad sign for me: Doug Kass is also bullish, although short term. Last several times Jim and Doug were both bullish, market fell big, if I remember it right. Wanted to check it through, but site is so badly organized, you need to spend hours if you want to go back more than couple of months.

I liked a new term "Great Recession", mentioned today on CNBC. That's almost acceptance. With such speed, we can get real acceptance real soon. Like in February or March. It's almost funny, but this term might be more correct that "Great Depression 2.0". If we start getting out of it in 2010, it's not a depression. Deep recession, yes. Lot's of people suffer and many more will suffer. But it will be over fairly quick. I hope. Because there is another possibility: Japanese disease.

But even my best forecast (spring of 2010) doesn't match bull market now. Market leads economy by half a year, usually. Then bottom should be in fall of 2009, a year from now. Market might hold current level or go lower. It's not likely to go much higher.

Of course, I can be wrong. Actually, I want to be wrong.

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