Fundamental Trading Diary

Fundamental analysis of the capital markets

Market Overly Optimistic

I do think that we’re nearing the end of this bottom – for now.  The end of quarter loss-selling should be over.  Christmas shopping is nearing.  We’re so oversold that the downside is largely exhausted – it’s easy to make the case that the people who were shaken out of stocks are probably mostly out.  The big margin calls have been made.  We’re ready to start moving up again.

But not this week.  Manufacturing is down (ISM 38.9 from 43.5 – and manufacturing prices have fallen 53.5 to 37, signalling a massive decline in demand).  What do you think that’s going to do monthly factory orders tomorrow?  ADP’s official guess on unemployment and NFP change on Wednesday will not be pretty, and neither will the real BLS numbers on Friday.

The only wildcard is the election.  Will unfounded optimism and new hope prevail?  It didn’t help when Bush  was elected mid-bear market.

Adrian Ash outlines how massive expansion of the monetary base will lead to stagflation.  Silver’s still under $10.  Buy it there while you can!

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November 3, 2008 - Posted by | Uncategorized

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