The window of opportunity continues as we hold positions

After three days of advances the futures indicate the US markets will start lower this morning reflecting European trading which is currently off about 1.2%. However Asian markets were up significantly last night with Hong Kong up 4.6% and Japan up 1.8%.

Both the NASDAQ and NYSE composites broke well beyond their 50-day moving averages resistance levels yesterday on about 5% higher than average volume. There appears to be reluctance to short stocks that are already beaten down to historically low levels.

Yesterday the Fed decided to keep the federal funds rate, used by banks to set rates paid on many types of consumer and business loans, to a range between 0% and 0.25%. The Fed said the worst will be over this year and recovery will begin by the end of the year.

Other good news is that our two party system did not collapse and President Obama did not get Republican support for his do-too-late political jobs plan. Wednesday he said that the country needs immediate action to solve rampant job loss. But his bill doesn't do that. His bill sets up government subsidized jobs one to two years from now. The new president is rapidly losing credibility. Americans do not want a third world economy. Americans do not want the kind of government economic programs they see used in Bangladesh, Nigeria or Rumania or political hack hiring socialist programs like they have in Detroit and Chicago.

The market climate for stocks remains characterized by favorable valuations and favorable market action. Depending on today’s activity we may stop cherry picking out of the market as we have when stocks rise into a 25% to 40% range and begin to hold stocks longer.

We believe we are still in the secular bear market that began in 2000 and will probably last through the year 2010. Looking back on this decade we expect we will see many similarities to the decade of the 1970’s, including peaking energy prices and inflation. Even Obama is beginning to look a lot like Jimmy Carter who started as a breath of fresh air and ended with a failed foreign policy and record inflation. Only we expect President Obama will leave us in a worse state because he wants to nationalize and expand the corrupt practices of unions and one-party socialist politics. He wants to take the right of a secret ballot away from workers so that, as in Communist countries, dissidents can be caught and punished severely. In America we sometimes don’t even find their bodies when they upset the unions.

Using the 1970’s as our model we can expect wide swings in market prices. The 1970’s was a decade of books declaring the coming of economic depression. Only then, we tended to postulate that the Mid East would pull our plug and now we postulate that China will pull it. But when you think of the consequences, China really can’t pull the plug without losing their money because it becomes worthless as we saw with the recent collapse caused by the politically inspired and defended corruption of the mortgage industry. If a mortgage lender was honest and would not loan to ineligible people he was called a racist and cut off by Fannie and Freddie. They were forced to squander American taxpayer and investor money by the US Senate banking socialists who now have influence over the entire executive and legislative branches of the US government. The 1970’s had several opportunities but was a dangerous time for those who bought and held stocks or who timed the market badly.