Bear Market?

Stock market seems stalled near the all-time highs. PE ratios are through the roof. Despite the Fed-fueled market, we have, in fact, a very deplorable economy, with high unemployment.

Beginning to feel like it is a bear market. You get sharp, fear-ridden drops, and very sharp, bear-market rallies that end up fading. Feels like that is about to happen. Look for these 1.5%+ rallies that end up fading after sharp drops. If that starts to occur, would not be surprised to then see a big 5% down day soon. That would really unnerve the market. That would mean the bear market has begun with a vengeance.

Everyone is thinking the Fed will save us. What if that is wrong? One thing you don’t want to do is buy the dip in a true bear market — what everyone has been doing now for 10 years.

The new mantra could be sell the rally — as in get out — and then go short. But watch for these sharp drops, followed by explosive rallies. Yesterday was kind of like that. The S&P actually went down sharply to 3805 and then rallied back to a decent gain before ending the day fading into a small positive uptick.

When the bear does start, all the buy-the-dip traders are going to be fooled.

Stock Market

Bail Out

The Treasury and the Federal Reserve are bailing out virtually everyone, but who is going to bail them out?

The Treasury does this by taking on more government debt; while the Federal Reserve does this my magically creating money from simply expanding their balance sheet. In both cases, in other words, the money used to bail everyone out is created out of thin air. When this charade ends and this house of cards collapses, who is going to come to the rescue?

Public School Disasters