No. of Recommendations: 12
It's been a while since I made a list, so here goes.

REASONS WHY THE STOCK MARKET WILL GO UP.

-There is lots of credit around
-The world is (relatively) at peace.
-Long term, the trend is always up.

REASONS WHY THE STOCK MARKET WILL GO DOWN.

-People have been pulling money out of US stock mutual funds every week since the first of August.
-The money supply is no longer growing fast.
-High fuel prices are a drag on sales and profits.
-Interest rates are going to be increased by the fed unless bad things happen first.
-Mutual fund cash levels are extremely low.
-There are signs that foreign CBs are investing less in Treasuries. If this is a trend, long rates will rise.
-Money managers are very bullish.
-We have broken down from the "Black Diamond" and we have just seen the "Hindenberg Omen". A collossal Head-and-Shoulders is almost completely formed in the Dow.
-The Dow/gold price chart is now in a well-established downtrend.
-VIX is starting to rise from its long stay at the bottom.
-In the economy, the housing boom is slowing.
-Other indicators are starting to roll over.
-The new credit card minimum payments start this month.
-The new bankruptcy rules start soon.
-The Bush tax cuts have completed their effect.
-The depreciation rules boost is now over.
-Wage and salary workers have not seen their lot improve for a long time, in fact they are steadily falling behind in their real standard of living. This affects optimism negatively.
-Rising short rates put the huge existing debt pyramid and its attendant derivative mountain in jeopardy.
-Corporate profit margins are at a high extreme, with improvement unlikely from here.
-P/e ratios calculated the boring old fashioned way are at a level similar to 1929 before the crash.
-Debt ratios of nearly every kind are very high indeed.
-Most of the oldest, most successful, independent market observers are very worried.
-Mr Greenspan is issuing warnings again.
-There is a growing awareness in the country as to how insanely far the govt. has dug us into a hole with its debt and unfunded obligations.
-People in the market understand the instability that is part and parcel of the twin deficits, because everyone is talking about it.
-The trade deficit is now much higher than the five percent of GDP that everyone said was the breaking point. At least they used to say that. Now it's over six percent.
-There is a movement starting in the Congress towards actually doing their jobs in the area of controlling spending.
-Consumer confidence is falling. Why wouldn't it be?
-Margin levels are quite high again and rising.
-Program trading recently hit 70% of market volume. I don't know if this is bad, but I don't see how it could help stability.
-Money is pouring into the Japanese market because their economy is improving a little, even though their national debt is just tragic. This bankrupt nation is the best value that stockpickers can find. The Japanese themselves are throwing money at India even though that market is priced way higher than it's been for decades. Bottom line: there are no bargain markets left, nothing close.
-Commodities are in a major bull market. This is bad for corporate profits and feeds inflation too, which pushes up interest rates.
-We just passed the point of balance in interest payments. Net payment flow is now outward from us to the rest of the world, and growing like a wild weed.

I could go on, but it's getting late. I've reduced my already-puny US stock allocation this week and hedged with a couple of short funds. (BEARX, RYVNX). I've also sold some gold/silver stocks and bought more CEF and GLD with the proceeds. Still long Japan, precious metals and mines, commodities, and precious little else.

Right now, I think a bear market is inevitable. If anyone wants to bid US stocks up, they can do so without my company.

Good luck,

Ed.




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