Sunday, January 27, 2008
We Are Nowhere Near A Bottom
GOOG short has worked out perfectly since it's downside breakout from this symmetrical triangle. I have taken some off the table as GOOG is finding some support at its 200 dma but am still holding some as I believe this market is headed even lower.
Many are enjoying this bounce following the rate cut we had earlier this week but do not, I repeat do not take on big long positions. This economy is in some serious trouble. Consider this, all the losses by major banks so far have been due to low rate fixed mortgages. What is going to happen this year when all these ARM's go up? I will tell you what will happen, more losses and lower prices.
To make matters even worse, our dollar is sinking and there is nothing Bernanke can do about it. Bernanke is getting a lot of bad press but look at the situation he is in. If he refuses to lower rates, you will see this market drop off a cliff. If he keeps lowering rates our dollar will continue to fall. It doesn't matter what he does, he will be wrong. The only really safe play right now is gold. Bernanke has to cut rates, and that means gold is going to go up.
We are in a bear market so that means play by bear rules. All major indexes have just completed the death cross with the 50 dma crossing below the 200 dma. The majority of opportunities will be from the short side here. Look to sell the rallies.