Prague Twin

Tuesday, July 18, 2006

Economics

Before the s*** hit the fan, I had predicted that we would see 10.700 on the DJIA in "about a month." Well, in 4 days here we are. Having said that, I think this level is the bottom for the stock market for now. I don't expect it to go much lower. Despite the war, the U.S. is not particularly involved and doesn't need to be. I picked the 10,700 level specifically because it seems to provide some resistance. Why? If you know anyting about technical analysis, there it is. One thing I love about numbers is that they don't lie. In fact, they can't lie. God I love numbers. If only people.... well, that's another discussion.

The DJIA has stabilized, posting it's first gain in 4 days. There seems to be fairly stiff resistance around 10,650. Three days in a row the DJIA has bounced right off that level.

What is absolutely confounding me is that this war in Lebanon is a dollar positive. There was a theory floating around that people were looking for a "safe haven" to put their money, but this theory has been dispelled. In fact, the most productive cross since the inception of the war has been NZD v. JPY. The New Zealand dollar is anything but a "safe haven." So what we are really seeing is the effects of repatriation. Americans are easily spooked and at the first sign of trouble, they bring their money home. This creates dollar strength. Good? Well it would be if the U.S. wasn't so desperate to increase exports and pay off a 8.4 trillion dollar debt. Right now, dollar strength weighs on everything. Economics are like karma, if you believe in such misguided hippy fantasies.

So Americans are bringing their money home. Great! Too bad that when they do, they will find a glut of cash from the Bush tax cut, and little opportunity to invest. I suppose bond yeilds will provide some relief for the conservative minded, but just wait until corporate earnings start to shrink and then watch the deficit blossom.

Oh, you supply-siders. You rule the world when times are good. But in harsh times, you sell the future out from under us. I'm sure you are very proud. Well, actually the people who actually have money will be just fine. It is all you wanna-be rich people who will pay the price when the whole thing collapses under it's own weight.

You know who you are.

Enjoy. Enjoy the Bush economy!!!!!!



4 Comments:

  • Good call on the 10,700.

    I see Yahoo reported disappointing numbers. I bet the Nasdaq takes a hit early tomorrow.

    By Blogger reality-based educator, at 1:25 AM  

  • PT Are you trying to cheer me up?
    Actually one hasd to expect it.

    By Blogger Cartledge, at 6:35 AM  

  • RBE,

    The Nasdaq has been taking the brunt of the fall anyway. I think the bloodletting (no pun intneded) has stopped, at least for now. Add Yahoo on to the pile of disappointments. It looks like the bottom is actually about 10,650. I figure we will bounce around between here and about 11,100 for about a month. Time will tell if I am right.

    C,

    Of course I am! As you say, it was to be expected. Cocaine economies always suffer major corrections. House of cards? What ever you want to call it.

    By Blogger Praguetwin, at 8:47 AM  

  • I agree with your prediction about 10,700 as a bottom but I coudn't explain why. I didn't follow the rest, but then I'm truly ignorant of economics.

    By Blogger Roger Fraley, at 1:17 AM  

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