The Games Continue

So much for “no entity is to big to fail”, another rescue plan is unveiled over the weekend.  It is a losing game.  When mortgage lenders were making loans in 2005 in a residential real estate that was 46 percent above trend what were they thinking, stairway to heaven ?  So this is going to take a while to unravel, we don’t see a real bottom before 2011 and at prices that will be at or below trend.

In the meantime the stock market may see a half-cycle bounce to the 1300 area in the S&P, but it is probably an untradeable bounce as it is based on bottom-pickers and government intervention, not the most stable of criteria. As such we contine to look for this summers market in the S&P to base in the 1100 area and then we may see a 10 percent summer rally to the 1260 area. 

8:08 AM CDT