10/7/08Why I not post anything yesterday?! Today's market action has showed the evidence. There has never been follow through day after each possible reversal day. Anyway, the chart above will guide you we are really really close to bottom. Market will bounce any moment. We are already nine years into the first decade of the 21st century, and those first nine years are on pace to be the worst start to a decade since 1930s. Unless we get a major rally to close out the year ( 15%+)
However, I have other data to suggest the Nightmare is just started. The powerful correlation between margin debt usage by member firms of the NYSE and the trend of major indexes suggest further selling ahead in the main indices. The super large leverage accumulated during the last bull market is now forcefully being undone by a powerful combination of margin calls and acceleration market losses. Also, combine with credit crunch and decreasing house prices. We are soon surely into phase two of recession or depression. Now, it is very certain 100% US is getting into a very pro-long recession ( At least years to two ). I have been saying this and predict this months ago and give caution to my blog readers. Unlike Fed Chief now he finally accept that US is into recession. Do anyone notice the main stock indices are diving hard each time our Fed/Treasury did some sort of bold action/plan?! Big players are not buying it each time and so are we/me. We gonna fire Fed Chief, Treasury Chief, Bush....etc. They do not know how to fix our problem at all. They all have no clues. The market has showed us the $700 billion plan is not gonna help at all as I said before. Next support for Dow is 9000. Below that level is 7800-8000. Remember the last post I said " Fasten your seat belt ". That's my bold statement before Monday and today action. Now, I guess you all know why I have keep my extreme bearish from start of this year. It has proved me no wrong at all. Good luck!
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