Thursday, March 13, 2008

Bear Trap Rally Ahead?

Both George Ure over at UrbanSurvival (morning update for Wednesday, March 12, 2008) and Charles Hugh Smith over at Of Two Minds have thrown out the possibility of a sharp, sustained bear market rally that levitates the Dow Jones Industrial Average in the coming weeks if not months.

You can also follow along at Prudens Speculari if you want to see real-time trading by a professional.

Is The Market Setting Up for a Huge Rally?
March 13, 2008

Ever the contrarian, I look at charts and wonder: is the market setting for a huge rally that will decapitate all the supremely confident Bears?

Yes, we all know the economy is sliding into recession, and very likely a deep, prolonged one; that oil is $109 and heading who knows how high; that the credit bubble has popped; that the dollar continues downward in what looks like a death spiral; that trillions in derivatives are poised to tumble into the abyss--the list of ailments is so long that we wonder why the patient hasn't just expired from exhaustion.

I brought up the possibility of a real rally on January 30--not just a one or two-day short covering blip, but the real deal: We Told Ya So--But So What?

In the face of overwhelming evidence that the stock markets should fall another 30%, or perhaps 50%, why do I persist in looking for the chimera of a rally?

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