The Great Fiscal Stimulus Package of 1929

Does the title sound familiar, with the exception of 1929? Read the article and see if you can substitute 2008 into the title. Article is located at Mises.org. Make sure that you follow the link to the original article that was published in Times Magazine.

Need One Say More

The Market Has Spoken!

The weekly 1387 level on the S&P 500 was taken out this week (See chart below). Given this penetration, we are now either in a "major correction or bear market." Therefore, our focus will be on sell signals rather than buy signals. Sell signals are the mirror image of buy signals. Our primary bear market instrument is the SDS, which is an inverse ETS of the S&P 500. As an inverse ETS, its price rises when the market (S&P 500) sells off.

Since the market is extremely oversold, we should expect the market to rally short-term. Keep-in-mind that this is not a time to me looking for a major bottom. Don't get sucked in by those pundits who will be screaming that this is a golden opportunity to buy. Prepare yourself mentally to either short the market or purchase inverse ETFs, like SDS. The best chance for the market to make some kind of a bottom, based on market cycles, is around March 27, 2008.

Source: Jack Chan's "Simply Profits"

Inflation Jumps in 2007

Inflation rose to 4.1% in 2007 from 2.5% in 2006, which is the largest increase in 17 years! Take a look at the following chart of the growth of money. That just might help explain a good part of the reason for the increase in inflation.

Market: Critical Junction

As indicated in my post of January 15, 2008, all four long-term indicators have now turned "bearish." From a short-term perspective, this market is very "over sold," which should generate a price reaction back to resistance near term. If this is a start of a new bear market, similar to 2001-2002, the SPX must take out 1387 on a weekly basis. See the following chart from Jack Chan at Simply Profits. I will monitor very closely this critical level.

Investment Trend

As we head into 2008, the market is giving very negative (bearish) signals. If you have followed this blog over the course of the past semester, you would have been keep abreast of the key turning points to the market trend, especially the SPX's weekly 17-and 43-EMA's, which has been refined to a weekly 15 and 40 EMA's. Over this semester, I will continue monitor this long-term indicator along with three others, which are from the "Contrary Investor." These three indicators are the SPX Trend Line from 2000, SPX's 80-week MA, and SPX's 10- and 40-week MA. All four indicators are currently negative.