Market rebound still on schedule

A 200 day exponential moving average tracks the lower range of the last bull market and the upper range of the current bear market. If indeed the current market excursion has bottomed then how high could the next excursion go before the bear market downtrend resumed? We compute that the market would likely rebound 20% to 25% from Friday levels before hitting the bear market upper range of price swings (the 200 day moving average). That would recover the entire market loss since mid September.

This does not mean the bear market is over. The bear market would likely resume in 2009 until mergers and acquisitions of troubled companies begin to pick up. We predict that the $billions being pumped into the world economies will eventually end the bear market with a flurry of mergers and acquisitions that restore the value of the entire market. The velocity of money will then pick up so that the hundreds of billions of dollars of new credit will result in the trillions of dollars of equities purchases leading to the restoration of the savings and pensions of those who were patient enough to stay invested.

We maintain that we are only entering a recession and nothing more. Fear of a depression served its purpose in changing the political control of the US government. The current 6.5% American unemployment is only about half of what socialist nations such as France have to deal with even in boom times.