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U.S. Stock Market - Sorry to say it but the U.S. stock market is getting uglier. The “bounce” off of the October lows has been feeble while breath is far uglier on down days versus up. Meanwhile, the fundamental news is getting worse. I believe Paulson’s “switch” from using the bailout monies to buy up toxic mortgages to ejecting it into banks, has been perceived as a slap in the face to Congress and that he continues to be flying by the seat of his pants please read: (http://finance.yahoo.com/news/TARP-A-Rescue-Plan-or-cnbc-13606550.html).
This has caused the “Big Money” (what’s left of it) to feel things are far worse than what Paulson has been letting on please read:
(http://www.nypost.com/seven/11162008/business/tarps_not_working_138932.htm).
The feeling is all the horrible fundamental news see(http://articles.moneycentral.msn.com/Investing/JubaksJournal/whats-scary-about-this-recession.aspx) combined with the technical picture is going to take out the lows of October 10th and another leg down will follow. I fully believe this, so I continue to advise staying out of the market.
If and when I do go back into the waters, I’m likely to be over-weighted in foreign stock markets versus the U.S. Russia, China and Hong Kong have my eyes right now. One sign of a potential U.S. stock market bottom is if and when the financial stocks (what’s left of them) lead the way to the upside. Please read: (http://finance.yahoo.com/tech-ticker/article/129825/Citigroup-and-JPMorgan-Still-at-Risk-Says-Analyst?tickers=c,jpm,bac,%5Edji,%5Egspc)
Gold – The physical market remains incredibly strong while the Comex market trades as if physical demand was weak. As this article suggests (http://www.nypost.com/seven/11182008/business/governments_cant_handle_global_run_on_go_139306.htm?page=0) something is fishy. I continue to suggest waiting on the sidelines with any new money until the paper gold price can climb above $775.
Base Metals – Still on sidelines and this appears to be the place until at least the New Year.
U.S. Dollar Index – While dollar spreads are continuing to be unwound, giving the dollar some support, upside momentum has waned. Once the short-covering is out of the way, I believe we shall witness a significant fall in the dollar.
Oil – I’ve been on the sidelines since near the highs, but I’m getting itchy to pull the trigger. I think the time may come if I’m correct about another leg down in the stock market. Stay tuned.
Mining and Exploration Shares – They, too, are likely to be pressured in a general stock market decline. We need gold above $775 to get some separation for gold stocks from general equities.
Special Notes of Interest - I’ve felt that an Obama win would lead Israel to attack Iran’s nuclear sites before Obama’s inauguration. Please read:(http://www.jpost.com/servlet/Satellite?cid=1226404771120&pagename=JPost%2FJPArticle%2FShowFull)
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