"AS GM Goes So Goes The Market - Ugh!

The old saying used to be "as GM goes, so goes the market." For decades, many analysts used the GM bell weather theory to determine if we were in a bull or bear market. Well folks, GM along with Chrysler and Ford might be about to be flushed down the toilet.


I have been repeating over and over that "the October 10th bottom will hold as long as there is a fact based belief that the US and world governments have done - and will continue to do - what is necessary to stop the financial crises." Right now it does not look like the US and world governments are doing their job

On the home front, Treasury Secretary Paulson says that things are OK, but is not spending the $700 million that Congress gave him with a sense of urgency. Indeed, half the funds are unspent and Paulson keeps on changing his plans. On top of that, we see the entire US auto industry's fate being kicked back and forth in a Congressional debate.
Finally, we read that the USA has taken a back seat at the recent World Economic Summit.

This is not the way to keep the momentum going. Therefore, the market is starting to fade again. Unless the government gets off it's indecisive ass, this market will crack the October 10th lows. I can not believe that am actually wishing that President Elect Obama gets sworn in sooner rather than later.

Right now deflation is rearing its very ugly head while Nero fiddles. I am no socialist, but I believe that we have no choice other than to save the US auto industry at this time.

Dear Congress: Stop arguing - earmark the $35 billion for the big three and put strong enforcement provisions into your legislation. Dear President Bush: Cut a deal with President Elect Obama to jump start the economy by spending the remaining $350 billion NOW!

It's time to sell one half of our longs, which brings us net net flat. We are now 20% long high alpha stocks and 20% short the SPY. I am not saying that we are definately taking out the lows. After all, this is the 21st century and our leaders can't be dumb enough to blow their chance to save us - can they? Don't answer that! I am saying that we might take out the lows, so when in doubt - get out.