in my view, stock bubble is clear feeble 2000 bubble retest
it is attracting all the deep vested interested folks
e.g. stock analysts, mutual funds, pension funds, momentum investors, illiterate investors who lost their asses
the retest will likely end up eventually the same way
like down down down significantly
it is largely sustained by Fed Monetization of TENS and S&P baskets
much of the Fed's activities are unconstitutional, but cheered
but the Contrary Investor analysis linked here...
contraryinvestor.com
makes a great argument that we are probably setting up a powerful technical rectangle for the S&P, Dow, Naz to live inside for the next 2-3 years
and in time, each index will break down to new lows
but for now, the rectangle will contain the damage and expectorations
I personally believe that 3 major factors will take the stock indexes below the rectangle of Dow 7700-9500
1. lost jobs (systemically, broadly, climaxed in car sector)
2. imported product price inflation (from Europe first, then Asia)
3. higher energy costs (both oil and natgas)
the vehicle will be the gradual erosion of the Real Estate bubble
anyone who doesnt believe an RE bubble exists, should examine tech/telecom/media/internet stocks in 1999-2000
fundamentals on rent, occupancy, time on market, valuation growth versus income growth all indicate a bubble
and the greatest force in maintaining the bubble is the Fed
that article by the BigFisherman on "Housing Cover Clause" was very insightful
the Fed is backing the USDollar with the housing sector
it wont work for much longer
the fundamentals wont sustain it
the parallels with tech/telecom/media/internet are too clear
far more time will be required for nature to catch up these wizards who are not only inept, but arrogant
/ jim |
