Deflation starts hitting the economy bottom up – the stock market keeps plunging slowly but steadily
Sam Adelton
Mar. 3, 2007

The deflation is hitting the lower income population badly. The rich are still singing the song of euphoria, mega mergers, oil boom and gold glitter. But the low and moderate-income population is getting hurt as the mortgage lenders and credit cards refuse them access to new loans.

Start of the end of the euphoria is quite near. The market plunge resembles very closely that in August 1929. Bulls are still there. They are actually buying now as market slowly wipes them out through margin calls on stocks and options. The hedge funds are bleeding – they never saw any bare market!

The Reuters/University of Michigan's final index of sentiment declined to 91.3 in February, a five-month low, from 96.9 in January. Lower-income Americans accounted for ``nearly the entire'''' drop in confidence, the report said.

The university's gauge averaged 87.3 last year. A fall below that magic number of 87 in the future months will confirm a deep recession if not depression in 2007-2009

Sixty-three out of the sixty-five Dow stocks fell on Friday – the worst market technical strength seen since 1929
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Analytics normally do not just look at the percentage fall in the market. It looks at the breadth of the market – how many stocks can really defy the fall in the overall market.
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Treasuries gained and stock market collapsed to a three month low – a clear sign of deflation driven recession
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The ferocity with which the stock market fell in the last 35 minutes on Friday, March 02, 2007, it is very clear that something fundamental is wrong in the economy. It is deflation showing its power on the stock market.
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Deflation starts hitting the economy bottom up – the stock market keeps plunging slowly but steadily
Sam Adelton
Start of the end of the euphoria is quite near. The market plunge resembles very closely that in August 1929. Bulls are still there. They are actually buying now as market slowly wipes them out through margin calls on stocks and options.
READ MORE>>

Can Dow Jones Industrial Average crash in April?
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A great investment for the next ten years – buy sugar and sell the crude oil
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The almost unchanged confidence level in the University of Michigan data points to complacency – a typical sentiment in deflation driven market collapse
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Complacency is always followed by a serious stock market decline. It happened again. People are complacent and the consumer confidence levels are very high compared to the fundamentals in the economy.
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