In Doubt

Those politicians, government officials and talking heads that avoided saying the 'R' word even though the economy is already in a recession are now the same talking heads that are telling us that 'less bad' is 'green shoots'. When are things getting worse not as fast is considered as things are getting better? After the unemployment report came out last Thursday showing it is at a 26 years high, all of the sudden these talking heads are in doubt on the second half 2009 recovery and are telling us things will get worse before it gets better... what happen to the green shoots!

Since the stock market is one of the leading economic indicators and typically lead the economy by six to nine months, then those that believe the March 2009 low is the bear market bottom shouldn't have any doubts the economy will start recovering no later than the end of 2009. For those that believe we are still in a bear market, then the earliest for the economy to start recovering is Q1, 2010 provided the market makes a bear market bottom this month. Looking at the way the market has been trading, it is near an inflection point that the market can move down to test the March low. And if we are lucky, the market makes a new non-confirmed low to end this bear market and we can start counting the days for the economy to start its recovery. Here are the charts, click on them to get a larger image and to read the embedded commentary.







Just for the record, I am one of those that believe we are still in a bear market and this rally is a bear market rally. I along with many of you am also looking forward to an early economic recovery. To a trader, it doesn't matter if it is a bear market or a bull market, opportunities to make money exist in both market environments. But a bull market and a strong economy definitely is good for Main Street.