As we are between fib levels for a retrace of P1 (between the 38.2% and the 50%), I really expect us to make our way to 108.4 before a true turn around. We are approaching a trendline that was support during the early part of this bear market and now is acting as resistance. The market should pull back after a test of this trendline (its one of the green dotted ones, up to you to figure out which one :-P)
A test of the red trendline on the VIX chart would correspond to the same test of the green dotted line for SPY.Currently the market is massively bullish (the CBOE Put/Call ratio is below 0.6 as of Friday). But unemployment is still remarkably high. Cash for clunkers ends tomorrow, what do you think that will do for new car sales? Retail numbers have been ok the last couple of months (unexpected drop last reading), but what is it going to look like with out the new car sales?
There is still a glut of foreclosures in residential and CRE is starting to collapse.
"RAH RAH! We are saved!" is only going to last so long as American workers are still losing jobs at a very high rate. How much are you going to keep up your spending habits when you see your neighbors out of jobs?
I think this Christmas is going to be VERY LEAN. We will spend more time with our family than money. The weak retailers went under at the beginning of 2009. Expect many more retailers to be weakened to the point where they will be gone in 2010. This will put extreme pressure on CRE and the institutions that hold those loans. Its going to be tough for the government to bale that one out.
Good luck to everyone...and if you see Southern Taste Chicken Salad out there...buy some! All natural ingredients(antibiotic free chicken) and more chicken than any other chicken salad on the market!
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