The Fed has been attempting to stimulate the economy like never before, but will it work? Some economists and pundits say it already has worked and that the U.S. has dodged the bullet of recession. These people are either dolts or publicity-seeking liars, or a combination of both, and we'd suggest tuning out their blather, since there is no factual basis whatsoever for their assertions that the economy has bottomed. And on what do these mountebanks base their optimism -- other, perhaps, than blind faith and/or an overweening desire to appear on television? Merely because no large banks have failed in more than a month is hardly reason to infer that our troubles are over. Far from it. And yet, the huckstering economists who would have us believe they see light at the end of the tunnel apparently have extrapolated their bullish scenarios from a recent uptick in retail sales that was due more to higher gasoline prices than any other factor. By this logic, we should expect the housing market to begin a powerful recovery as soon as gas reaches $5-$6 a gallon. A Trillion Wasted To the contrary, the economic recovery that more than a trillion dollars worth of Fed stimulus and bailouts has yet to engender can occur in one way only: via a resurgence in home prices. Nothing else that we can conceive of is capable of reviving consumer spending, and without plenty of it, the illusion of an economy barely creeping along that some still cling to will soon give way to the grim realities of subsistence. How would we know if and when a recovery is under way? Look no further than the 'For Sale' signs on your neighbors' lawns. Although this is the last place a navel-gazing punditry would think to look, it
Friday, June 27, 2008
Selling Still No Panic
– Posted in: Current ToutsWe put out some bearish targets a while back, not expecting them to be reached so quickly. Now what? Our original advice called for bottom-fishing in the E-Mini S&Ps, Citigroup and the QQQQs, but we are seldom eager to attempt this when price targets are reached in the final minutes of the day, as occurred yesterday in two of the three vehicles. At the bell, stocks looked like they wanted to keep falling, but this must be weighted against the fact that index futures were actually wafting higher in after-hours trading. Granted, the buying wasn't very strong, and by early evening the futures had eked out only a 2.50-point gain from their intraday lows. But any such buying, no matter how feeble, should serve to remind us that profit-taking by shorts will tend to interrupt even the most devastating selling panics. Will yesterday's near-panic continue into week's end? We may have an answer early in Friday's session, since the E-Mini S&Ps were approaching a Hidden Pivot support that looked well capable of generating a tradable bounce. (See Tuesday's Touts for a detailed trading strategy.) If sellers turn the support into pulp, though, it would be warning buyers to move to the sidelines. The S&Ps have been very predictable lately, even if they've taken their sweet old time getting to their targets. We'd touted a bearish price objective at 1291.25 a while back when the futures were trading about 40 points higher. Because that was a fairly important Hidden Pivot support, we'd expected it to provide more support yesterday than it did. The seven-point bounce that occurred precisely from that number was the best of the day, but when the pivot gave way a little more than an hour later, it was signaling more, and probably considerable, weakness ahead. Fantasyland The
