A big bounce is due soon

10, 9, 8, 7 6,..... launch

To launch a real rally the news media and Congress need to lighten up on their negativism… because their dour attitude will destroy this important retail season which normally accounts for almost 50% of our annual sales. The president elect is already taking many very positive steps. The country need some decent economic news in January.

There is evidence that the small investors who were weak hands have left the market and the downside volume has dried up. So now the funds control the volume and they are at this point in a zero sum game unless they drive the market up and attract more investors. With the market this low the funds can only cut up a very small pie and every fund that wins does it at the expense of another fund. So now if they short too much the pie gets smaller and they all lose.

Add to this the year end tax losses are almost settled and it is time for the funds to deliver and document their year end gains. Therefore unless they want to look very bad, the funds need to grow that pie by Dec 31. The only way they can do that is to cover some of their shorts (about 33% of investments now) and take a more positive position at this market low. Then when all the little investors jump back in next January with the new president’s inauguration… the funds can begin to unload and take short positions again.

One problem with a GM buyout is that the high paid workers already get early retirement and want taxpayers to pay the cushy pensions they get which more than doubles what social security gives average Americans… and they get it as early as age 55. The Republicans think the GM workers should go out and get jobs and only collect pensions when they reach 65 like most Americans. The Democrats on the other hand take big union contributions and feel the quid pro quo pressure to give the unions Anerican taxpayer money in return. The GM union wages are bad enough but the pensions make it impossible for GM, Ford, and Chrysler to compete. And as long as managers can get a free government handout they don’t care about stockholders. The GM shares are worthless anyway and the shareholders only theoretically select the management. This is a similar situation to that in Europe before World War II when the management took all the assets and left the population of Europe penniless. Something should be done but GM should be forced to reorganize the way Lee Iacocca reorganized Chrysler and gave Chrysler 20 more good years of productivity.