Probing down for stable price and real value

Yesterday, It seemed at least occasionally that we were looking at the second attempt to find a real low in the markets – primarily the DOW. The close at 7552 was the same as 20 NOV 2008. But our theory speculates a rise after finding the low. That of course has not happened, which puts the theory in a spot. Not that I think it is wrong, just maybe it is telling us we haven’t hit the low yet.
My speculation, this time last year was that if the US Gov did nothing, the markets could hit 6000 by convention time, and might find 600 by election day. The Gov intervened and that of course has not happened – yet. Presuming all the efforts to fix the problem work, it should not. However, the current efforts by the new administration are much more focused on Main street issues, than on Wall street.

Some republicans are now talking about nationalizing banks, so if the republicans want to nationalize banks, where do we go from here? Greenspan is yammering about how we need to prevent bubbles. There is one way, and he – being a republican, can’t actually think about it seriously. The best way to stop bubbles is to tax trading profits – short term capital gains including real estate. If your work day to day is creating capital gains – you are not an investor, and you should pay tax on your earning from that work, like everyone else. This takes away the incentive to cause bubbles in the first place, and presto no bubbles.

As for the market, my projections if the probe to bottom fails at 7552, the next double bottom probe is 7528 of 04 OCT 2002. Today the market crashed though that one hitting 7484 at 10:12 AM EST. That was not a good sign, thought we can hope it were an anomaly. The market has closed at 7551 today.  It either rises and drops again later to 7484, or it continues with bubble busting and heads for 6738 from 25 APR 1997.  My guess is it heads down from here.

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