Monday, December 08, 2008

We have now entered the phase of this bear cycle when the news gets worse and the stock market goes up. Most will be scratching their heads not realizing that the market is a discounting mechanism, always looking forward not at the past or even the present. Couple this with the year end incentive to prop the market up to save some face and we could get a nice December. In 2009 all bets will be off as more businesses fail and we may get a test of the lows again. But lets enjoy this disconnect for now. The S&P needs to stay above 870, and a close above 900 will trigger higher levels, perhaps even to 1000. The Dow has drawn a line in the sand at 8000 with resistance at 9000 then 9400.