In This Issue:
The Long-Awaited Bear Rally May Be Starting
Although Weak, Some Hopeful Economic Signs Are Emerging
Credit Is Slowly Opening Up Again
If Fear Subsides, The Outlook Will Improve Immediately
A Recovery Will Bring Unwelcome Inflation
The Bottom Line This Week
As
we reported in our previous issue, the sharp stock market advance over the
Thanksgiving holiday came to a crashing end on December 1. However, prices have
been stronger since then. Although the gains weren't enough to fully erase the
earlier plunge, the Dow and the Nasdaq managed to end last week down just 2.2%
and 1.7% respectively. From Monday to Wednesday of the current week, the market
managed to make some additional gains.
It's
significant that the price increases occurred while more bad economic news was
breaking. A manufacturing decline, an auto sales plunge, and more job losses
should have pushed stocks down several more notches. The fact that investors
largely ignored the negatives may indicate that the bear market is close to a
bottom.
...