US and the Unbreakable 8000 Barrier

I take it you think this bear market rally has a lot more legs to it, or do you think this is the beginning of the recovery?

 

See... it bounced right back to 8000.

 

The market was really struggling to get back over the 8000 mark, I would think there are a lot of people out there willing sell into the rally when it moves over 8000 and/or short ti when it drifts back over the 8000 mark.

I'm not saying this market rally can't continue, I just think it is fighting an uphill battle at this stage and I still expect this will all ultimately be a bear market rally.

It would seem that even despite the recent job loss figures the market is holding, March lost 660,000, apparently January actually lost 740,000 which is a hell of a lot more than was originally quoted, making me think that March's result will eventually be revised down to 700K - 800K, maybe more, which to me only highlights that unemployment increases at this stage is not even slowing down, let alone stopping, which for me signals that these glimpses of a recovery are false.

So for me I can't see how the market will hold itself up as we move forward and the good new fades in light of the continued acceleration of this recession... the only thing that could save the market from further falls would be the FED stepping in starting to throw its fiat money around.

 

Chris,

I surely hope the FED doesn't pour more fiat money into the market place, it's been said on these forums a number of times but the US surely must be heading towards a massive INFLATIONARY headache, zimbabwe anyone?

 

Well there is cause for hope on this front...

The FED is a private institution, thus it likes to make a tidy profit, and through the process of this recession the FED has expanded its balance sheet enormously and bought a lot of distressed assets (mortgage backed securities) at pennies in the dollar as the buyer of last resort. To turn around and inflate the currency now would only eat away at the profits they would yield from selling these assets for true value when they eventually recover... so I'm conflicted as to what sort of threat inflation really is in the short term given that right now the FED itself could potentially lose considerably if inflation really took hold.

So arguable the FED stands to gain further from deflation, in the short run and thus I expect that Dow probably wont' be further protected from inflationary forces in the short run, though with that said I think down the line inflation or at least the depreciation of the USD against commodities is almost a certainty...

...but that's just my two very conflicted cents.