US Stocks: Down, Down, Deeper and Down
By Sam Kirtley
06 July 2010
After an impressive rally of over 80% from the lows made in March 2009, the US stock market looks ripe for another plunge south. This rally was never sustainable, rather than being built on solid fundamentals and a genuine economic and business recovery, it was merely the result of multi-billion dollar bailouts, near zero interest rates and the feeling that no matter how bad things get, the government will save the day and stop any Armageddon scenario.
Although this may be true, the government may indeed be able to prevent the apoplectic scenarios many feared would eventuate during the financial crisis, this does not mean that the governments and central banks of the world can conjure strong, consistent, sustainable growth in the global economy, nor a permanent bull market in stocks. Sure pumping trillions into the system and slashing rates to zero is bound to have some effect and give markets a boost, but what now? The markets have had a shot of adrenaline, but it now appears there isn’t much else to get excited about from a bullish perspective.
In fact it is those who are short the market that should be getting excited, especially when one examines the technical position of the S&P and Dow at present.
Comments on this entry are closed.