smartinvestor30
05-18-2009, 02:04 PM
Personally I have never been through a time like this. I doubt any of us have. This rally is amazing to me and even the analysts are saying it would be great if we could pause, pull-back, and consolidate. We did not get to the 945 level on the S&P which would test the 200-Day MA. If this rally continues I'd really love to see what happens there. My guess would be that it can not sustain a level above the 200-Day MA for very long. What I'd like to see to get back into this market long is a 50% pull-back. Here are a few reasons why this rally will come to an end.
The Fundamentals are horrible:
1. The Government is expanding putting an unbearable burden the the Tax payer, to add fuel to the fire the tax payer is as short on money he/she has ever been in history.
2. Jobs continue to be shed at an alarming rate. 600k+/ week in job losses means:
A. Less money being funeled into 401k/IRA's
B. Less income tax paid (or none since you've lost your job)
C. Less money spent in the economy on good and services
3. It's a consumer economy and when you take the consumer out of the equation the end result is going to be horrific. (who knows how long it will take) Also credit is being taken away from the consumer.
4. People are still losing their homes. There are many problems in Real Estate, the ALT-A Loans will bring the next wave of panic. Alt-A loans, for those that don't know, are called Option ARM's or "pick-a-payment" loans. They have the same sub-par credit borrower who was most likely speculating on prices.
5. There is too much money being printed/borrowed. The end result of this will be massive inflation not to mention the double digit interest rates we'll have as a result to try and save the dollar.
6. The consumer has finally started saving (although little) and the impact of this is slow growth in the economy. Not a long-term bullish signal by any means.
That's all I can think of for now. It doesn't look good for the long term at all. :embarassed:
The Fundamentals are horrible:
1. The Government is expanding putting an unbearable burden the the Tax payer, to add fuel to the fire the tax payer is as short on money he/she has ever been in history.
2. Jobs continue to be shed at an alarming rate. 600k+/ week in job losses means:
A. Less money being funeled into 401k/IRA's
B. Less income tax paid (or none since you've lost your job)
C. Less money spent in the economy on good and services
3. It's a consumer economy and when you take the consumer out of the equation the end result is going to be horrific. (who knows how long it will take) Also credit is being taken away from the consumer.
4. People are still losing their homes. There are many problems in Real Estate, the ALT-A Loans will bring the next wave of panic. Alt-A loans, for those that don't know, are called Option ARM's or "pick-a-payment" loans. They have the same sub-par credit borrower who was most likely speculating on prices.
5. There is too much money being printed/borrowed. The end result of this will be massive inflation not to mention the double digit interest rates we'll have as a result to try and save the dollar.
6. The consumer has finally started saving (although little) and the impact of this is slow growth in the economy. Not a long-term bullish signal by any means.
That's all I can think of for now. It doesn't look good for the long term at all. :embarassed: