I am leaning right now towards the Red line. A slight pullback to the June highs and a finally ramp up to the the downtrend line from 2007.
On a technical level the market would made a 50% retracement from its 2007 highs, it would be hitting is longer-term downtrend line and I am sure on some level it would be overbought. Also read the post below, many sectors can hit long-term resistance in September.
But on a fundemental level. I think this market runs up until late Sept or Oct, when government spending finally runs out and the powers at be can't prop the market up. Job's numbers will be worse then they are now, with unemployment at 10%+. U-6 could hit 20%. No longer can the excuses that "it's lagging" work because it is just getting worse.
People will want to know where all the jobs the stimulus money went. The wont settle for "it is taking time".
September 30th, Q2 final GDP won't be as good as last week's numbers. Then October 30th, Q3 advance GDP number will be horrible ending this run up and idea that the economy is fixed.
Why September and October you ask, because that is when people will lose the safety net of unemployment checks and will be absolutely broke.
Read today's NYTimes article, in which is discusses how come September millions will be left without there unemployment checks.
At this point people will be getting pissed, they will hear more about big financial firms raking in profits and bonuses. They will hear "analyst" and "Experts" saying the economy is doing great. Dennis Kneale would call himself a "Market Guru".
But the real people will finally see that this is bullshit, they cannot find a job and haven't been able to for almost a year and now have no money coming in.
At this point they won't care that their 401k is up this year, because they will be cashing it out so they can eat and pay their bills.
The housing market will weaken as foreclosures will finally be hitting the market now that government foreclosure extensions run out and people will have to foreclose on their homes.
It will all hit the fan at once and the Finanicals will have their bonuses and great profits. While the tax payers is broke and losing their home.
The housing market will weaken as foreclosures will finally be hitting the market now that government foreclosure extensions run out and people will have to foreclose on their homes.
It will all hit the fan at once and the Finanicals will have their bonuses and great profits. While the tax payers is broke and losing their home.
