The new positive spin is what we anticipated

The Obama rally turned into a dead cat thud on inauguration day. It drove us to the December resistance level from which the market bounced yesterday.

And did you notice something new yesterday? Did you notice that the media started emphasizing good financial news? They mentioned a few corporations that reported profits last quarter when even a week ago they were trying to say no one was buying anything and sales were way down when in fact sales were down only 0.1% for all of 2008.

Remember they said 2.7 million Americans unemployed was the worst level since 1946 which is about as dumb as a fence post and about as relevant. American unemployment today it is only 7.3% while in 1946 the 2.7 million were well over 15% the work force. The media and the Obama people spun everything negative to make Bush look bad and set Obama up to be the messiah.

But now they are starting the positive spin we predicted so President Obama can get credit for avoiding a depression that he and the media were in fact causing by disparaging America’s financial and social support structures.

Well the new positive spin is what we anticipated would cause the stock market to begin to surge as the fear of a depression abated. The sell window cracked open on January 20 and currently the crack is 26 days long. But six days like yesterday could open that selling window up for four months or more. Remember our first sell window was open from June 20, 2007 to Nov 2, 2007.

Some of the high dividend stocks we bought have been up 20% to 50% already but most stocks are back to December lows. Now you know how well you could have done and we expect this next rally to be the big one so you know from the last month, the potential profits you could take over the coming months.

You might think, "why not buy now since we are near the December low?" No one can argue with that and that is exactly why we will get a bounce now. As depression fears abate and President Obama gets the credit as the new American hope you can sell or sell the political hype short and profit from the change from negativity to irrational exuberance.

We believe the window of opportunity for selling will open well beyond a month and we will try to cherry pick out of the market. For instance the oil tankers, the dry ships, may not exceed their previous 40-50% gains because they were mostly profitable with high oil prices. But the resources such as copper and cement will be in demand for China’s and later America’s infrastructure work. The Asian ETFs (non Japan), the big machinery and the telecommunications stocks could recover most of their 2008 losses.

Your 401 may recover significantly as well. Then we will give the countdown for the sell window closing. It is best to cherry pick because stocks peak at their own times depending on their own news. We will also get our 401 out of stocks at that time.

Again, six bull market days or more could push the closing of the selling opportunity out much further in time. We hope that will be the case and if the media continues a positive spin that should happen.

We think the housing problem will bottom out in about 5 months based on a normal economic recovery caused by the FED’s low interest rates. We expect most of the new economic stimulus will come too late and may result in an inflation bubble.

We expect to continue to average one or two major buying and selling opportunities a year or one every three to six months.

Last night Asian markets were up and average of 1% and Europe was also up about 1% but seems to be slipping, anticipating a down day on Wall Street. Wall Street may begin lower but is already lower than it was before the inauguration so we expect it could hold its own today. After all, the media seems to be continuing the bullish spin it started yesterday.

Good luck on your investment journey