Is The Rally Real?

Posted by Ray on October 13, 2008 under Main | Be the First to Comment

The markets are up, massive international government intervention has saved the day! Not exactly. We do not think this rally should merit excessive investing into stocks just yet. The issues at hand are still there and the credit markets are not open today.

Japan had a national holiday so a major indicator was not available as a barometer of world opinion. Europe has moved very, very fast to quell this mess, but the US has not. They are talking about guaranteeing inter bank lending and a whole host of other guarantees. Long-term this is good, but for right now, there is still too much going on to arbitrarily say everything is OK.

The volume is weak in trading today and tomorrow will be the day to know if we have hit the actual bottom or not. Even if tomorrow confirms a bottom, it does not mean this is over, by a long shot. We still say dollar cost average into equities, do not jump in. We called a temporary bottom on Friday, but concerns are still high. Enjoy today’s rally, but do not get used to it.