A Blind Eye Led the Market UP in 2009

Feb 23

By Michael Markowski

Yesterday’s Decline in the U.S. Consumer Confidence index to 10 month lows underscores the severe problems that the U.S. economy and stock market is facing. Additionally, the present situation index for consumers dropped to 19.4 from 25.2 in January, the worst since February 1983. An un-expectant decline in housing prices for December of 2009, is also an ominous sign of woe. The problems for the economy continue to mount. A recent U.S. Government spokesperson recently stated that over 50% of all commercial real estate by the end of 2010 will be subject to foreclosure.

As I have recently stated the U.S. stock market was able to mount a bear market rally for the ages off of its March 9, 2009 lows because the Obama administration purposely casted a blind eye to financial regulatory reform in 2009. Now that financial regulatory reform is on the front burner the shares of financial companies will remain under pressure and will lead the rest of the stock market lower.

In light of the significant declines in consumer confidence the move by the Federal Reserve to increase interest rates last Thursday February 18, 2010, seems to be premature and illogical. This is especially since the move by the Federal Reserve strengthens the U.S. Dollar against the Euro. Given that the Euro continues to weaken against the U.S. Dollar and that I expect that it will ultimately go to new all time lows. I continue to predict that the U.S. stock market’s major indices including the S&P 500 and the Dow 30 Industrials will see new lows before the next Presidential elections occur in the U.S. I continue to suggest that investors maintain a 80% cash position in their portfolios.

For more information on the bear market go to www.bearmarkettracker.com, which is my web site.

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