HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Eight Down-Days in a Row.
The market was crushed today. The DJIA finished down 265, and has now been down 8 days in a row. This has happened only 4 times since 1978. It’s time for a bounce. There are 3 possible scenarios:
1) The market will open tomorrow down, and then reverse to the upside.
2) The futures will be up before the open, and the market will open to the upside.
3) The market will open down and stay down.
Hope it’s not #3, as this would indicate a market so weak it can’t rally after 8 down-days in a row.
More likely is that the market will end tomorrow up. What then really counts is the rally that follows: Is it a typical “dead-cat” bounce that last 2-7 days, and the market then breaks down to new lows, or does it mean the bottom is in?
In addition to the action of the market itself, watch:
1) XLF, an ETF of the largest financial institutions. In yesterday’s letter, I noted that XLF, which had been leading the way up and down, was sitting at multi-week lows. XLF was smashed today, breaking decisively below those recent lows (see chart, next page).
2) Interest rates. The rate on the 10-year Treasury-Bill nose-dived to 2.63%. The Treasury market is screaming that business activity will contract.
3) Gold is going straight up. People are scared and turning to the only “honest” currency that can’t be manipulated
I suggest:
1) You must own gold. It was up almost $40 today to $1659.
2) If you are on margin, you could soon join Lehman Brothers on the junk pile.
3) Have plenty of cash, including some physical cash in the safe deposit box.
4) Whether you lighten up in the stock market is up to you.
What scares me most is what I think is scaring the market—the totally inept, pathetic and impotent politicians of both parties, past and present, that we voted into office. They got us into this mess; everyone knows what the problems are, but no one has the courage to stand up and do what it takes to get us out.
This latest political settlement is not only “kicking the can down the road, it is kicking the American people down the road”.
RMD
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