Terry, #1 has been common thinking, maybe it's time to be contrarian, we have just come off a period of huge arrogance, a 20 year bull market in us equities, new economy (new era), remember the US has pounded Japan for years at G7 to get their house in order.
It is impossible to ignore NOW that the Nikkei is still above 11,000 breakout, while the nasdaq is testing the sept lows, and both spx/oex are below feb lows.
2) The small caps still refuse to follow the large caps <<<<<
there is something bothersome about this, small caps where the rage as the market was topping after the huge bull run after WWII, Capt. James Hopkins use to post on SI about the tail wagging the dog.
This just maybe more sector rotation, which we have seen a lot of since we saw a confluence of all sectors peak at the october 97 high, with a bull market peak in new highs in NYSE.,
money managers have been told to stay fully invested, since that guy got fired at magellan in 96 for buying bonds,
so they are seeking the latest hot trend, which is now small caps.
they sold that 5% GDP like a bad dog, ugg.
on the bright side, almost everybody is bearish.
>>>Three thoughts-
1) If the U.S. sneezes, the rest of the world catches a cold. So, while the ROW (rest of world) may look healthy for a little while, the U.S. will not go down alone in the end. We are the economic engine of this planet. There will be no safe havens if the U.S. enters a depression/ extended recession.
2) The small caps still refuse to follow the large caps down for the most part. This signals to me that the economy is OK. The large cap weakness is a 'capital' problem. Or an 'investment' problem. Foreign money may be shying away from the US- Remember, we are a country at war, and the war may just heat up again.
3) If the large caps stay down, then the small caps, and hence the economy should follow. Like the ROW, the small caps won't stand alone for too long.. |
