In my last post I raised my upside target for the rally to Dow 8500 - 9500. I said that we should stay invested but take some profits at my original rally target of 7800 - 8000 where the market should first pull back a bit before resuming the rally.
Now its about time to put that money back to work. No matter how insanely inflationary is President Obama's wild spending spree, the stock market has the green light for now. The death of the auto industry has been discounted by the stock market for ages. It is already baked into the cake.
Now its about time to put that money back to work. No matter how insanely inflationary is President Obama's wild spending spree, the stock market has the green light for now. The death of the auto industry has been discounted by the stock market for ages. It is already baked into the cake.
The real key is that the government is finally doing something about the toxic assets in the banking system. In addition, the change in "marked to market" rules enacted yesterday is huge. Furthermore, the economy is awash in money in terms of money supply and fiscal stimulus. That money needs to find a home.
Possible pitfalls to the rally are always there. If North Korea goes haywire with their missile launch, all bets are off.
In short, all the Obama administration had to do was to fix the banking system and set up some focused stimulus plans. Instead they overreacted and initiated a poorly Pelosi Reid planned stimulus package. On top of that they have added all kinds of left wing deficit social spending programs. That is going to lead to problems down the road. But, the stock market is not looking at those issues now. It will later.
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