SubscribeAll Posts Tagged With: "bear trap"
Why Bernanke’s ‘Bailout Exit Strategy’ Could Be Problematic for the U.S. Economy
At its most basic level, the U.S. Federal Reserve’s so-called “exit strategy” is designed to let government bailout and liquidity programs unwind on their own, as markets return to a state of “normalcy.”
But what investors don’t realize is that without an exit strategy that includes plans for unwinding insolvent mortgage giants Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) – now more accurately defined as government-sponsored hedge funds – recent market gains will be limited and will likely reverse. If those setbacks cause the nascent U.S. housing market rebound to stall, it could even lead to a decade-long downturn.
And Fed…
31Jul2009 | Money Morning | 0 comments | ContinuedCan Last Week’s Rally Be Sustained?
Is it a bull-market rally or a bear-market fake?
It came right down to the wire, but the Dow Jones Industrial Average ended the day Friday with its first four-day rally since November, ending the week with a gain of 9.0%. And despite that robust performance, the Dow was the laggard among the three major U.S. stock indices. The tech-laden Nasdaq Composite Index soared 10.6% while the broader Standard & Poor’s 500 Index edged it with a weekly gain of 10.7%.
Fuel for the rally came from several sources. Stocks had sold off sharply coming into last week. But then such beleaguered banks as Citigroup Inc. (C),…
16Mar2009 | Money Morning | 0 comments | ContinuedThe Gold Market
Bulls and Bears Still Fighting Over Trend
The charts are playing tricks. A bear trap in April stopped short of turning into an all-out bearish failure with a bull trap in July.
In English, please? The bulls got suckered.
Gold prices fell through their $850 May low now, which means that I was wrong to think that the market had discounted a reversal in oil and the dollar, both of which we fully expected.
But could the market be setting up the bears here?
The last time that we saw two false signals in a row was in 2004, when a marginal new high reversed…
3Sep2008 | Whiskey and Gunpowder | Comments Off | ContinuedWhy Today’s Bull Market is Tomorrow’s Bear Trap
Depending on your perspective, U.S. equities are either at the edge of another cliff or at the dawning of a new bull market.
We could make the case for either. But in as much as that would be an interesting exercise, the more relevant question is what the data suggests.
Let’s take a look.
Since their 52-week highs last October, the Dow Jones Industrial Average Index has lost 18.5%, the S&P 500 Index is off 18.2% and the Nasdaq Composite Index has fallen 15.1%. At the same time, the broader U.S. economic picture has darkened considerably with gross domestic product (GDP) a slim…
13Aug2008 | Money Morning | Comments Off | Continued
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