Monday, January 5, 2009

Market Following Expected Pattern

The market is following the pattern I expected, and I think this will continue. We're going to see a lot of trade-able rallies, and many of these will be related to the economic stimulus package. The "experts" are coming out in full force saying "the bottom is in" "time to buy stocks" etc. I think the general public will be pretty hesitant to listen to them this time. Read more about this in my 2008 RECAP/2009 OUTLOOK.

Like I said, the best buys are short-term trades, because there are too many uncertainties. Earnings is one of the big ones. We're going to get a little clearer picture in the next couple of weeks. We know the results will be mostly weak, but the outlooks are much more important than the numbers right now. We're obviously going to get a lot of spin that says the numbers, although bad, were better than expected and its time to buy. I'd urge caution when listening to that talk.

Although the financial crisis was started by the banks, this is going to be a consumer-led recession. Employment numbers are weakening, and until the job market and real estate markets show some stability, consumers will be hesitant to buy.

A big part of the economic stimulus will be creating jobs, and many supposed "green jobs." That all sounds great, but we've talked about the potential stalling of alternative energies. Energy prices are low, capital is hard to come by, and businesses and individuals don't have the extra money to change to these expensive alternatives. Sustainability is one of the big buzz words within this movement, but I'd be more worried about he sustainability of these "green jobs."

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