Wednesday, May 17, 2006

 

Crash Alert


So it must be time to buy. (Chuckle)







The stock markets, for there are more than one has broken through support on a daily chart. (Not shown but you can use your imagination to fill in the trend channel lines.) I am using the Russell 2000 because it is a broad index that has clearly trended since the end of 2002. The bottom trend line comes in at 680 and that should be support, unless we are experiencing a significant crash. It is very unusual for a crash off a stock market high. '87 was not typical. What is typical is a months or years of falling prices before the urge to sell strikes the average investor. I am worried about a crash now for two reasons:

1) The real estate bubble has burst and everyone is hearing about it. This has a much higher potential to affect your average consumer than the stock bubble. Which leads to..

2) The MSM hates Bush and anything that could precipitate bad economic news which will hurt the Bush administration will be trumpheted. Get ready for an onslaught of Ma and Pa America are losing on their real estate speculation stories.

P.S. Gold and Silver have put in tops but it is too early to call those markets as anything more than a pause in their bull markets.

P.P.S. My mother might have a hairline fracture in her left leg. She can't put any weight on it but nothing is on the x-ray.

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