It looks like the problems of FNM and FRE will be cleaned up next week. My uneducated assessment is that this is a good thing. I read several gurus who think this is a terrible idea and only passing the debt on to the taxpayers. I think this is a terrible argument and not well thought out. FNM/FRE is debt owed by the taxpayers to the taxpayers. It is only a cleanup by the accountants. The analogy is that of closing out a losing trade. The money is already lost. It isn’t coming back. Holding the position could make the situation worse.
Suppose FNM/FRE are ignored and go bust in the next few weeks or months. Who pays and suffers from this? We taxpayers! We won’t be able to sell a house. We won’t be able to buy a house. Our bank will possibly collapse. Again, the loss is inevitable. The only choice is how we let it play out. My preference is for organized failure versus chaos.
But there will still be a loss and I don’t trust a rally based on this news alone. While I believe this will shorten the duration of the pain, I think there is a good chance for a rally into next Thursday-Monday and then the market will roll over into October. The May-July time cycles ends this Thursday. The 180 day cycle hits late next week. I welcome the low here but don’t think the time is right.
A bullish chart that offers a possibility of a low at this point comes from the range square of the 2000-2002 bear market.
The 1:8 descending Gann angle and the 1:4 ascending angle meet next week. The 1:4 was the support line in July and on Friday.
A recap of last week’s posts:
- Inflation or Deflation - Theory of Relativity
- Time Cycles End Next Week
- Reversal Day on Lower Volume
- Long Term SPX
- Destination SPX 1171?
- SPXEW and VLE Heading for Lower Gann Angles
- Market Internals Not in Position for a Rally
- Nasdaq Swing at 50% Retrace
- Second Distribution Day in a Row
- Intermediate Term Position of Strength
- Big Outside Day Distribution
- Value Line Arithmetic At Gann Angle Resistance
Post Modified: September 7th, 2008 at 9:58 pm
Tags: A-B-C Correction · Elliott Wave Analysis · Gann Angle Fan · Gann Emblem · Market Outlook · Roadmap · Standard and Poor's 500 (S&P500)2 Comments
2 responses so far ↓
up down up
down up down
……
zzzzzzzzzz
Let’s see, where are we now?
I still think up into the end of this week and then back down. That is only a guess…