Down - Bob

If you are a regular reader of BobandScott.com or or the Bob and Scott feed, you will see that I haven’t had a positive view of this economy and my feeling is that the market got way ahead of itself.  Today could be a pretty big move toward a prolonged down move.

The Gov’t threw a TON of money at our economic problems. Unfortunately, the public sector is hoarding any cash they have and not backing up the buying. How is the car market?  How is the housing market? How do you feel if you are an insurance agent or financial planner? Has your insurance rate gone up? Look at your own neighborhood and ask the questions about how things are going.  Your own back yard should be telling.

When real estate sales are rolling along, there is equity coming out of homes and moving into alternative investments.  That has not been the case. Folks who used to qualify no longer do (2 in 3 applications do not qualify).

I expect the downside in the DJIA to test 9100.  This down move could be prolonged due to some very likely bank issues that could rock the market.  Remember, the bank projections were based on a worst case scenario unemployment number.  Not only are we at that number, and likely past it, but those who are employed are seeing salaries, hours, and overtime cuts.  9.5 ouch.  9.5 with less payroll. Big Ouch.

I asked Am I too doom and gloom? back on 9/17/2009.  I really don’t think so.  Now, I am thinking that I might not have been negative enough.  Sure, I moved some money to cash, but I haven’t positioned enough for the downside move.

Let’s also not forget that we just got out of the 3rd quarter.  Wall St. (the gov’t involved portions anyway) has seen their pay scrutinized and cut.  Bonus that comes from a strong quarter was at risk.  Guess what happened at the end of the 3rd quarter?  We powered up.  Nice move when it comes to bonus time.  Traders, you can remove the window dressing now.

What do you believe?

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