S&P Dealt a Crushing Blow

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Chloe Fonda

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Jan 17, 2010, 3:19:06 PM1/17/10
to shares forex and the mar5kets
The level of optimism in at this stage of a meteoric rise in the major
indexes is staggering. It's as if the whole credit crisis/meltdown was
nothing more than a bothersome distraction. The markets rally when the
news is "not so bad," when earnings which have been reduced repeatedly
are then miraculously "beaten," foreclosures didn't rise quite as much
as they expected them to, spiraling federal deficits and runaway
unemployment. Why would the markets care about such trivial things?
There are a few lone voices of reason such as Meredith Whitney, who
correctly called the financial crisis early in 2008, Ian Cooper and
prominent investing newsletter adviser, Jeff Clark. Each have called
for a sharp decline in the Dow, S&P, NASDAQ, commercial real
estate, banks and insurers. The simple fact that these indexes have
risen between 35% and 40% in a little over nine weeks should be
flashing like a neon danger sign, but no one seems to notice.
After a 40% rise from the March ninth lows the average guy, the retail
investor starts feeling like they're missing the rally and begin
piling in. No doubt with the hopes of recouping some of the
devastating losses they incurred in '08. This is the exact moment the
market slams the window shut and delivers another blow of devastating
losses. How much abuse can the "small guy" take?
Empowered by both fear and greed, they relentlessly buy at the tops
and sell at the bottoms, feeding the markets insatiable desire to
devour their dollars. If one was to only do the exact opposite of what
the average investor did they would have a 50% better batting average
and do better than most stock picking gurus.
If you think the economy has recovered and this is the new bull
market... well think again. You have two choices. The first is to step
aside and raise as much cash as you can. The second is to Short the
S&P.

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