Market Recession or Rally??

Rally or Recession...

Roughly about a week ago we all were a little queasy after viewing our portfolios and 401K accounts.  The economic picture in the US and in Europe made us all nervous and sent the markets in a spiral downward.  The levels we briefly hit were low, so low that it nearly reached a 20% drop from the peak of where the market were earlier this year.  This dubious drop is typically referred to as a 'Bear Market'.  Since April, the markets have dropped about 17% from its levels at that time and have been rocky since then.  Sooo are we back and is this RALLY for REAL???  Well you may not like what history says about 'Bear Markets'!  Bear Markets are often marked with quick bursts of large gains like we've started to see last week and into this week.  Why the roller coaster ride, maybe its because we (e.g. investors) have no clue each day which direction we think the markets are heading.  And if we are clueless, history has often indicated that reality will often set in and then begins to turn back down.

URB Brief Notes:

- Netflix fumbles and backtracks. They drop separate websites, keep the high pricing and continue to disappoint.

- Sprint tumbles on news that costs are rising. Not to mention they aren't selling the I Phone 4S, which was just released...just the I Phone 4.  I haven't seen David Einhorn bolt from his position so hold tight and double down off the 52 week low.

- I'll be releasing my latest quarterly alerts shortly, an interesting bunch. 

Twist And Shout...

The reason why I call this post twist and shout is because I am definitely about to throw my readers for a twist. The twist goes a little something like this:

I have recommended since last September/October that we MOVE all of our positions into Cash, and Cash-like assets (Treasurys,etc). And I mentioned we would hold those positions until we hit a relevant level that may help form a bottom. At this point, with the new Treasury secretary (Tim Geithner) delivering his plan for the banks TOMORROW...AND the Senate finalizing the vote on the stimulus plan TODAY I am under the assumption, that any hint of news (as minimal as it might be), may cause the market to start rallying in anticipation of both announcements. I would increase your exposure to the market however incrementally. At this point no more that MAYBE 25% of your CASH position should be used to take advantage of this situation.

Now here is the TWIST, I am resigned to say that we are purely taking advantage of what will probably go down as a BEAR MARKET RALLY. This simply means that there are pockets, during an economic downturn where the markets need a breather and goes in the opposite direction. And that direction would be UP.

But this will be short-lived and the hard part to determine is how long this BEAR MARKET RALLY will last. I will go out on a limb and say it the market top 9000 to head for the hills as I believe that it will be trading in a range for a long time. I know I continue to deliver news that you may not want to hear but I believe that once we hit those levels the markets will continue to decline until critical things are addressed such as unemployment, foreclosure, and failing banks.