Dubai crisis is not strong enough to “correct” this irrational market.

What is amazing is that we get a slight amount of bad news, and the markets go for a panic and then a drop. Then a few days later some good news comes out to correct the bad news, and then the markets go for a recovery run. Yet, over the last number of weeks the markets have been having problems to make a break in to some new strong new highs.

What is very interesting, we could get a report that is of bad news where in a normal market everything would go down, but instead in the present market it goes up.

The key here is that this type of report would have less of bad news than the previous report of its type that was also bad. You could say that it is going from absolutely devastatingly terrible to just extremely bad. Maybe the next report will be just very bad instead of extremely bad.

The cycling of bad, good, bad, good, and so-on seems to be the trend right now. Maybe everyone should wake up, and just keep pushing the markets up since the bad news gets cycled out anyways. It’s better to be optimistic than pessimistic.

In going back to reality, one logical thing to consider is that after such a rally that we’ve been seeing it makes logical sense to have some kind of a serous pull-back. And, yet because of all the stimulus, bailouts, and more investors coming in, it may be a long time if any at all, that we will see some kind of a serious pull-back…

Or, is it very possible that this is the beginning of a real recovery???

Jobs are not coming back in proportion to the market gains that we have been seeing, and consumer spending is still very far down. Most banks are refusing to lend to small and medium size businesses.

With poor consumer spending, there cannot be any real growth. In essence, this market has to be artificially going up.

If the governments decide to discontinue their bailouts and stimulus packages I am sure the markets will take a huge plunge. (DOW 3000?) I doubt they will ever do that because it will mean the end of the economics of the world as we know it. It could also mean the end of the political world as we know it. This would be financial and political devastation.

If we look at the very long term deep technicals of the index charts, and do some serous research of the world economy, the markets appear that they can really go down a lot more. In theory, this type of a rally should be non existent.

In reality, this is a market rally with no real economic support. Yet, they also say, most of the time the market sees or reacts six months ahead of the present time. When it started reacting six months ago, there has been more job loses, and consumer spending was still decreasing.

Nobody really knows at this point. In looking at all that is going on, all the theory I learned about economics and how markets work is technically meaningless! This market does not make proper sense!

Jerry G.

Related Posts:

• Why people are buying?
• This six week rally started with two important events:
• The average person who has no real financial knowledge is about to get seriously crushed.
• Stocks are going to affected more and more in the coming months, the bottom I’m afraid about to fall out.
• This recession is far from over! We’re just lucky that it did not turn in to a full depression.

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