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US bear market in stocks and real estate ready for an intermediate bounce back before going further down
The bearish sentiment and hopelessness among the Wall Street professionals are conspicuous. They are bracing for another 12% fall in the market before a ‘perfect bottom’ is found. Unfortunately or fortunately when media and bulls turn bearish together predicting a specific percentage fall, the market normally turns around and creates a cyclical bull rally within a secular long-term bear market.
The market can rally from here upwards 10 to 25% with 5 to 6% inflation as oil starts falling apart. The bearish sentiment has to relax before further depletion in the market place can happen.
According mainstream media “The Standard & Poor's 500 Index fell into a bear market and may not stop tumbling until it reaches a level not seen since August 2004, if history is any guide.” History is always a guide till the mainstream media starts citing it.
Market never really replicates its chart patterns totally. It always fools those who look for exact repetition of the past.
Shares declined for five straight weeks as more than $400 billion of bank losses, record oil prices, and the fastest commodity inflation in 35 years threaten to push down earnings for a fourth quarter. S&P 500 companies are forecast to report an 11 percent decline in second-quarter profits. But not so fast. A five-week drop in stock price may be the right time to buy given the fact that it takes time to delete the credit card based purchasing power of the consumers that control 70% of the growth in the economy. Moreover, the negatives are all built in. It is probably time to cover short for those bulls who recently turned bears.
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