Weekend Musings

Been doing a LOT of reading this weekend. Trying to get an idea of what to expect next week. I feel like I'm teetering on the roof of a house not sure which way I'll slide. I haven't come to any real conclusions other than the downward spiral is far from over. The next two weeks may be the next leg down.

I have found some fascinating material about Elliott Waves and believe it or not I even subscirbed to a service for weekly and monthly updates. For those of you that know me, I'm a tightwad and for me to pay for a service means it had to really impress me and it did. I stumbled across a video of a presentation done at a conference held in October 2007 and was amazed how accurately they predicted what has happened. I'll keep you posted on how they do over the coming couple of months. If they don't do well I can cancel my subscription at any time.

So, back to what we're actually facing. Unemployment of course getting worse as expected (peaking at 9 or 10%), automakers facing dire times, financial institutions still on shifting sands, the gov't throwing the kitchen sink at things and still not doing much good. The automakers are the new ones with their hands out looking for loans. Insurance companies, home builders, credit card companies, homeowners, towns, cities and states also in line hoping for bailout, oh I mean "rescue". When will it end? I want to know where my handout is. Oh wait, I bought a house I could afford even after being told I could afford something twice as much. I bought a car I could afford that I paid off early... I guess I won't get any free money.

Here are a couple of things to think about as the end of 2008 rolls around... I've mentioned something about hedge funds having to liquidate some holdings by Nov 15 due to a rule of some sort about having to do so 45 days before the end of the year. Here's something else I read about today in the paper... retired folks over age 70 1/2 are required to cash in a portion of their retirement accounts every year based on value, age and other factors. Many wait until Nov or Dec to do this, so another wave of selling may be on the way at the same time. We could very well be in for a major move down over the next 6 weeks. I won't even get into the discussion of people over age 70 even being that heavily into stocks to begin with.

Now the good news. When the next leg down does occur we're due for an impressive rally. I estimate the Dow down to the 7800 range and then we could see it rebound to near 9400 before settling into a range for a while. I'll refrain from talking about where the true bottom could be eventually. There are some amazing and compelling theories and charts that I'm seeing. But until I learn more about them I don't want to discuss them in case they're just a bunch of crackpots ;-) I'll just throw a term out there... we know we're in a bear market, but I'm learning about a new term... Grand Supercycle Bear... a bit scary actually.