No. of Recommendations: 35
I hope you folks ignored all that doom and gloom last week and bought some great companies. Today is one of those 300 point up days that you do not want to miss. We cannot help the -300 point days like we saw last week when Wall Street trots out all the bad news they can muster.

Looking at general trends and ignoring the fluctuations and daily flutters the picture isn't quite so rosy.

The general trend of the market since August is down —I know it's up since 1972, and at some point it will be higher than its high of this year, but still, the current trend is still down and I'm at a loss to see why a 300 bounce is a sign of a reversal; especially as last week saw the biggest three day drop on the Dow in five years.

The general direction of oil prices is still up — consuming more of peoples disposable income and one of the brakes that is slowing the economy.

The general direction of mortgage defaults is up — and with adjustable rate mortgages resetting — interest rates going higher in '08 — the trend is towards more defaults. As people struggle to pay their sub-prime mortgages much of their discretionary income is eradicated and they are unwilling and unable to stoke the economy with the same level of discretionary spending. Most people don't want to default on their mortgage payments and loose their homes; most are not real estate investors, so they are limiting most non essential spending as much as they have to. This is another brake that is slowing the economy.

Even beyond sub-prime, the general direction of new and currently occupied homes is still down in most markets with still no sign of a bottom. Most peoples largest asset is their home, which a huge number of home-owners have used as a cash machine to enable their consumerism. Not only has that spigot run dry but peoples perception of their individual wealth has been rudely readjusted downwards causing them to spend less, even if they don't actually need to. This is another brake slowing the economy.

The general direction of interest rates over the last few years is still up causing a tightening in lending and borrowing. Although there has been some recent 'easing' because of the slowing economy and the mortgage crisis (what mortgage crisis?) the dollar has become so weak that further interest rate reductions risk a run on the dollar. Also because the dollar is weak, imports become more expensive and the price of many goods start to go up. The major responsibility of The Fed when assessing interest rates, is to tame inflation; because runaway inflation can be devastating on the macro and micro level. The Fed will start raising rates again at the first sign of real trouble. This will make stocks less desirable, not more, to investors.

Oh, and we're still in a bull market, but there are signs the bull is getting tired and old and the bear will come — he always does.

We're not out of the woods yet…
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