Late last week I called a bottom on the markets:
Why there could be a bottom in the market for the market today, tomorrow or Friday.
Is this the near term bottom?
This is IT!! US market set for a BLOODBATH!!!
I thought last Friday would the bottom for the DOW. However, there was some "leftover" selling in closing minutes of trading on Monday. While thre will be plenty of explanations for the rally - credit crunch easing, economy not that bad, interest rate cuts, bargain hunting etc. my take they don't pinpoint the real reason for the rally. I have explained that the major reason for the selloff was the loss cause by the collapse of Lehman. Lehman resulted in a "black hole" of about $200B and that causes funds and banks to sell hundreds of billions in assets around the world to raise cash. Jim Jubak explained that most of these losses will become clear on 24 Oct 2008 (it was Jim Jubak who pinpointed this date, not me) as derivatives related to Lehman Bros expire...... that wouldl cause the selloff to abate and a major rebound in the markets.
Like I said I believe this bottom is "near-term" (about a 1 month rally or less?). Markets will probably weaken once the economic numbers show we are headed for a severe recession.