Friday, August 31, 2007

 

There is a lot going on in the market...

...and I have no time to contemplate it let alone comment on it. The rally off of 12,500 is not surprising. For the record, the decline is three waves leaving a the possibility of the bull still being alive. I think not but Mr. Market has not given me any indication one way or the other. The rally off of 12,500 looks impulsive (Five waves) which could be the start of a new leg of the bull.

In the news we have the Fed and the ECB ganging up to prop up the market by lending large sums to counter the panic. It's hard to argue against giving the addict more dope when he goes into full blown tremors. The question is how much to give him without perpetuating the addiction. I'm afraid the answer is always that there has to be a little pain. So as a believer in capitalism I am appalled by the gov't rescuing stupid people but I realize that the housing bubble's bursting can be horrific for the economy and I can't blame the authorities for trying to stem the tide. In fact, I fervently hope they succeed as to not would mean a recession on a grand scale.

Which leaves the question will they or won't they? The Fed was very clever to dodge the twin catastrophes of the DotBomb and 9/11. Well, not really clever. They were smart enough to make credit as cheap and available as they could. Now that we are faced with a bubble which is an order of magnitude bigger I doubt that the old voodoo will do. Or as Joe Walsh once probably said, "The problem isn't that I was drinking, the problem is that I stopped." More easy credit for the economy, please.

P.S. I don't know what to make of this as the details are sketchy at best but I thought you should know that someone might be betting a huge sum that the market will crash in the next three weeks.

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