Observations & Commentary

By on February 3, 2008

The market weakened considerably, with the Dow getting as low as 11,508 intra-day on January 22, 2008, 10 trading days ago. Of course, since then we’ve seen the fed panic and drop rates 125 basis points and create a huge surge of buying. The fed will do their best to not allow natural market forces come into play. So it looks like we are at an important crossroads. If we are going into recession and this is really a bear market, the Dow will probably be a lot lower in 6 months. If the fed keeps cutting rates to 1% and achieves success in averting economic cleansing, maybe the bottom has been put in.

I have a feeling this is a dead cat bounce even though I did a tremendous amount of buying of stocks 2-3 weeks ago at much lower prices than they are now. In my opinion, there is simply too much oversupply of housing and commercial real estate to work off for the fix to be so quick.

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