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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (78827)	5/7/2008 11:27:55 AM
From: $Mogul	Read Replies (2) \| Respond to of 116555

I disagree. My itermeadiate models are the most extreme they have been since October 30th and we are still in a downtrending bear market. When I checked for other times during downtrending markets (essentially only 2000 - 2002) when the the model reached this kind of extreme the returns going forward were exceptionally poor - the one-month average in the S&P 500 was -6.6% with 0 out of 15 days showing a positive return. Over the next month, the average maximum loss was -8.2% while the average maximum gain was only +1.2%. During the last bear market, there wasn't a whole lot of upside left after the model reached this kind of extreme, and none of it lasted for more than a few days. The exceptionally low volume, negative breadth divergences and spotty signs of excessive optimism have begun to trouble me more and more, since as far as I see it, we're still mired in a downtrend and we're under another round of potential resistance levels. Also more then 60% of S&P companies have reported already so the optimism of buy the rumor has almost peaked if it has not already. Sell the news is coming..these earnings were not that great and many hardly beat the revised lower numbers.I also beleive the mkt is not has not priced in any consumer slowing and that is of majior concern here. I do continue to beleive the recent gains are going to be given back at some point..probably sooner then later. Historicly this is not the time to go long, especially after such a short ande fast bear mkt. short covering rally. I may be interested come Oct..but we will have to see where we are at. May-Oct are historically bad times to be long in the mkt(Hence sell in May and go away). Where I do agree with you is that the broad commodities including gold have more upside to go, and money will find there way out of equities and back in this sector. I see a blowoff in gold similar to how oil is reacting. I do not feel oil has much more to go here and is peaking along with the looming consumer led recession. We should see oil start to downtrend or at least trend sideways here.