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The current recession we are in is starting to drag down tech. On fears that the consumer spending is all ready getting hit.
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Note that support at the 50 DMA failed very fast, I expect that the 200 DMA will be tested.
Note that support at the 50 DMA failed very fast, I expect that the 200 DMA will be tested.
Consumer sentiment came in at levels not seen since 2005 after Katrina hit. Coming in a full 2.6 points below the consensus range.
I think that it is now clear that the economy can not take the effects of a declining housing market and high oil prices at the same time. Many people are wondering what is going on with Ben Bernanke saying that:
"he expects a raft of economic troubles will cause business growth to slow and as a lackluster forecast from Cisco Systems Inc. made investors wary of technology stocks. The major indexes each lost more than 1 percent, with the tech-heavy Nasdaq giving up more than 3 percent"Many people are wondering why Bernanke did not say this sooner. Did not he know what was really going on???? Of course he knew, but imagine the market reaction if he came out when the DJIA was at 14200, and said that recession potential is increasing or all ready here. He would have been blamed for the subsequent market fallout.
He obviously took notes from Greenspan, who never publicly said that anything was wrong with the market, but was not bashful to say so behind closed doors. The participants in these meetings never thought that the information would be made public, but the freedom of information act changed that. Minutes from past meetings were released and the public read what they were saying behind closed doors.
From the March 21, 2000 FOMC meeting minutes (the top of the tech bubble)
"The members noted that equity prices generally had posted further gains during the intermeeting period, but in their view the large increases of recent years were not likely to be repeated, and an absence of such gains would have a restraining effect on consumer expenditures over time."Why did not Greenspan warn the public at the time? Because he would have been blamed for popping the dot com bubble. Just like Bernanke would be blamed now if he really said what is on his mind.
Your job is to focus on the longer term picture. Monday will just be another day in market lore when you look back on it. It has the potential to be horrendous, I think that there is still opportunity out there to switch into gold stocks, foreign stocks, and Japenese yen. It is not too late to jump off the current bubble while it is bursting.
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