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Strategies & Market Trends : John Pitera's Market Laboratory
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To: pogohere who wrote (8638)1/10/2008 9:56:09 AM
From: Hawkmoon  Read Replies (2) of 33421
 
Pogohere, I enjoyed reading the links you provided.. And I think the most pertinent part of it was in the following paragraph:

* At the same time, since mid-summer the banks have seen $800 bln of assets come back onto their balance sheets as the financial institutions assume the responsibility from the SIVS and conduits; while capital has declined by roughly $50 bln. For the next few years, the banks will have little choice but to cut dividends, sell assets and raise capital to deal with these newly-found balance sheet exposures.

Traditional thought tells us that the Banking sector must be healthy for the US economy (equity markets) to perform well. Which means that cash will flow to places of maximum safety (T-bills and gold(apocalyse now?). The question is whether this credit crunch is due to spread across the global economy. Afterall, we're hardly the only country with overpriced real-estate.

So, I have to admit, I find myself increasingly charting the QID and DUG ETFs.. Can't bring myself to buy the shiny yellow metal ETF yet, no matter how high it goes. Gold is a stupid speculation based upon people's belief that somehow it should back a country's currency. But in a recession, people will not be using as much oil.

The only positive about this market is that the rate of bearishness is reaching dramatic levels and the contrarian in me says that we're due for a rally soon. But when we reach/retest recent higher levels, that's where it's going to get really interesting.

Hawk
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