The wild, menopausal swings in the stock market has captured the attention of even the late night talk hosts. Believe it or not, this is a good sign for the bulls. I am sticking with my call that the market will put on quite a show on the upside before reverting back to its bear market posture.
The up one day, down the next market activity is nothing more than a knee jerk reaction to short term economic data. I think its more important to focus on the trend of the data being released rather than a snap shot of one month or one week.
The bottom line and the "Big Picture" is this; the Fed will keep raising rates at their gradual pace until inflation is no longer a threat. Will this drive us into a recession ? Maybe. The ramped inflation that exists in commodity prices and raw materials has clearly spilled over into the real estate sector. Greenspan will squash this inflation bug.
Stocks are beginning to feel the outer bands of a tropical storm that will slow corporate earnings, and begin to put downward pressure on stock prices. In a week or so, I will begin recommending a few more defensive strategies to allow us to protect our portfolio's, and in some cases profit from the upcoming slow down in the economy.
