Dollar, Stocks, Crude – What is Next?

Nov 13, 2008: 10:39 AM CST

It’s rather ambitious to tackle all three topics in one blog post, but Adam Hewison released a brief video and commentray this morning that I wanted to share with you.  Hewison addresses the Dollar trend, makes a projection using the NASDAQ market, then reviews the current trend and projection for Crude Oil.

Entitled “Dollar, Stocks, Crude:  What’s Next?” Hewison briefly touches on each market in his five-minute free video and challenges you to view these markets on your own to draw your own conclusions.

Here is a brief reproduction of his remarks (reprinted with permission):

“A plan to save the world — part two, or is it three?

When Paulson came out today and stated that his earlier plan to save the western world was not working, he offered up a plan “C” (or is it “D”?) to relieve pressure on consumer credit, scrapping his earlier effort to buy the value mortgage assets.

No matter what happens or what the next plan is here, are the 3 reasons I believe stocks are headed lower.

* Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.

* Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.

* Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.

Okay, so let’s look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the ’70s. That bear market was brutal as it did not let anyone out. Over the course of the early ’70s, the bear market basically wore people out to the extent they eventually just threw in the towel. We believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.

The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope. The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace. Only when we see the new regime take office this coming January will we see any meaningful changes.

The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama can not make any sweeping changes until he is sworn into office. Yes, he may hit the ground running, but the reality is, it’s not for over two months from now and a lot can happen to the market in two months. The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and I expect they will be, it’s going to push this market and everything else down to new lows. It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.

Having lived through the bear market of the ’70s, I know firsthand how difficult the journey we face is going to be. Now this may seem like a very pessimistic outlook and in some ways it is, however there are always opportunities to make money in the marketplace. These opportunities may not be in stocks, it may be in FOREX or the commodity markets.”

My thanks to Adam and the Market Club for providing their information.

As always, capital preservation needs to continue to be your #1 goal if at all possible.  Take it day by day but focus on the larger trend structure of inter-related markets.

1 Comment

One Response to “Dollar, Stocks, Crude – What is Next?”

  1. Lisa Says:

    New president would perform miracles is a mirage for now. The mess is not because of lack of strategy, but result of earlier actions. Correcting the current one before jumping into bringing anything new situation is what our federal and corporation must be doing.

    Lisa

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