Here are the facts:
1) The recession began several months ago. The way economic numbers are massaged in this country, we may not know the true severity until it becomes painfully obvious.
2) By time our fearless economic leaders officially declare the economy is in recession, we will probably be close to being out of it.
3) The stock market is beginning a pattern of lower highs and lower lows. Be disciplined, and buy (dollar cost average) in when the market hits various downside targets. An example would be;
10%= DJIA 12,749
15%= DJIA 12,041
20%= DJIA 11,332
25%= DJIA 10,624
4) If this contraction in the market follows the pattern of past recessionary periods, buying in at the levels I mentioned above should payoff.
If the US should undergo another economic shock (terrorist attack, war, oil, etc..), then the decline will be much worse.
5) Policies coming out of Washington will affect the economy and the stock market. The New World Order (NWA) gang now have all of their Presidential candidates in a position to win. Most Americans are totally oblivious to what is happening around them.
6) Important stock market bottoms are reached when capitulation occurs in the stock market. Look for the signs of panic which are normally plastered on the front pages of newspapers or magazines.
7) Have the homebuilders capitulated yet?
Maybe. In 2008, the Homebuilding sector is the best performing segment of the US equities market so far this year.
Market Re-Cap
The Dow's early morning rally of 125-point gain evaporated after Philadelphia Fed President Charles Plosser said the chances of a U.S. recession have increased, and further rate cuts could cause inflation to rise.
Semiconductors and homebuilders led on the downside, while gold shares rebounded.
Macy's (M) announced it was eliminating 2,300 jobs and lowering its fourth quarter forecast.
The only bright spot of the day was Disney (DIS +1.70 to 31.77) after earnings beat estimates.
After the close, Cisco (CSCO, 23.08) warned that orders would come up less than most analysts had expected.
This morning, jobless claims came in higher than expected adding to our opinion that a recession is already upon us.
