This week the bulls had a three day window to reverse the
slide and could not pull it off. Bear Stearns, apparently up
to its ass in alligators, got its ratings cut, and the bears
took over. The selling today was more emotional and
indiscriminate. So we have have another "feel bad Friday" when
folks head home to ponder their losses.
I have been cautious on the market this year and have stayed
away. As I pointed out back last December, the global economic
expansion has been strong enough and gone on long enough that it
was only logical to expect that some of its excesses and
deficiencies might start to haunt us and create more volatility.
So, I blew off the idea of a forecast of the market, with the
idea I would take a back seat and see how the year went.
I mentioned on this past Tuesday that a 10% price correction in
the SP500 down to 1395 might better wash out lurking fears, but
also pointed out that I did not have a good clue whether such
would happen. With the "500" closing today at 1433, we are within
hailing distance.
Growth potential for the US economy stands only at 2.8% in my book.
The economy picked up its pace this spring, but has not been strong
enough to present a case which would dominate the junk credit woes
that beset housing and the world of deals. So, legitimate uncertainty
has crept in, but so has emotional selling.
I am staying out of the forecast business for now, but I would note
that the uncertainty is being well handicapped as we go and that I
am getting my first inklings emotions are starting to get a little
bit raw.
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