Even dead cats bounce when they thrown them off high buildings. But they don't usually land on their feet.

World Markets:

It is very likely that Chinese capitalism will fail this year as Russian capitalism failed in the last decade. However, they may become less communist and similar to the way Russia is today with a much reduced growth rate but still much better than under communism. Then it will again be time for Americans to invest in China.

As we have been saying:
It is time for a dead-cat-bounce and another confirmation of closing market lows (a buying opportunity). Then we expect the market to advance to close to its previous highs (a selling opportunity). That is because the raw indices have not given a head-and-shoulders sell signal like ours did. Only our volume-adjusted index gave the warning that the bull market topped (we have been talking about this since the divergence between the two started last October). Beware now especially of emerging countries and their stocks and bonds. Chinese corporations are beginning to default en-masse on foreigners. The communists can be expected to sting American investors in a professional manner that will cause investment losses two to three times more than their indices indicate.

Also there are many emerging nations in far worse financial trouble than Greece that are still selling low yield bonds to Americans. When the Russian bubble broke in the 90's and they defaulted, it brought down many hedge funds. So beware because China will likely default. In fact, considering that they are communist we can expect them to default the moment they have extracted what they want from us.

Economic Calendar
Late last week

Housing stocks have been hyped to record highs. Pending sales of previously owned homes hit a hyped five-month high in March as buyers rushed to sign contracts before a tax credit expired. Now people are beginning to walk away and default on all those banks that refused to negotiate. People who are not underwater have recently been encourage by sales. The double dip in housing could be limited primarily to overdeveloped areas in the South where seniors once liked to retire. Now many seniors are broke or cannot retire so those high end houses in Florida, Arizona, and Nevada are down as much as 50% and people (especially younger people) are walking away and renting for five years until their credit is clear again. That hyped houing market advance was actually a double dip. See:

http://www.martincapital.com/chart-pgs/Pg_existinghms.htm

Friday's reports:
The Unemployment rate rose to 9.9% from 9.7%. GE/MSNBC/Pravda and all the other national socialist propaganda machines did not like reporting that fact so perhaps 90% of Americans are not even aware of this news yet. The socialists have taken over all the national broadcast companies.

Non-farm employment was adjusted down from the 230K previously reported to 162K just before this report so that was so that the lying socialists had 68K they could add to the latest report (68K= 230-162). Remember how last week we showed that adjustments that always occur in a favorable direction are either incompetence (they don't know how to count) or they are lying just to deceive the public (they are common lying leftists like Hitler's Goerbbels). The lying leftists reported non-farm employment improved to 290K from which we subtract the lying change of 68K they took from last month to inflate this months numbers. Those leaves 222K first reported for this month vs. 230K first reported last month. Therefore non-farm employment actually decreased (-8K) and the Obama leftists lied again and reported a whopping increase (+28K). Lying leftists can only get away with it until the market gets so distorted it corrects itself automatically as it did last week. The more the leftists lie the bigger the correction and the more their economic incompetence turns America into a banana republic dictatorship or Greek style communist street riot dictatorship.

Consumer Credit showed Americans went $2 Billion more in debt last month reversing the good trend towards credit solvency. Now Americans are becoming more like the Greeks.
Economic Calendar this week

Monday, May 10:
Bank of England rate

Tuesday, May 11:
Wholesale Inventories

Wednesday, May 12:
U.S. Trade deficit

Thursday, May 13:
Unemployment initial claims

Friday, May 14:
Retail Sales
Industrial Production
Consumer Sentiment, Mich.

Market Outlook May 10, 2010
Volume remained high as the markets dropped on Friday. The market manipulators held the old exchange closing lows but our volume adjusted prices show the old resistance levels continued in a substantial collapse. Therefore the average investors (who cannot use volume) think the bull market held and the next high can be higher than the last. We expect an immediate dead cat bounce and then a buying opportunity as the average investor waits to test the recent low again. Then since the average investor will be told by GE/MSNBC/Pravda to expect a new high we expect the market wile rise close to the previous highs (when we sell everything) but fail to have a new high. Our volume adjusted NYSE price information will not likely even come close to its previous high. That advance will happen probably in early summer. Then we expect a second downward market plunge.

World Markets
Asian markets were up last night; Shanghai up 0.4%, Hong Kong up 2.5%, India up 3.4%, and Japan up 1.6%.

We expect the Chinese experiment to temporarily fail this year as the Russian experiment failed in the 1990's. Demand for oil, coal, metals, cement and other materials should then plummet. This will keep inflation low and allow Obama to dangerously increase American debt. Then when inflation starts rates will spike upward and America will have a socialist planned debt crisis that will require higher taxes. Then as the crisis ends the leftists will keep the higher taxes and redistribute the wealth to buy the votes of their permanent new voting underclass. They will try to follow their heroes like Chavez, Ortega, and Castro in making the constitutional changes to convert the USA into a banana republic socialist state. Then their permanent underclass majority that the wealth of the productive minority and squander all of America's accumulated wealth.

After severe losses last week where head-and-shoulders breakdowns occurred in some European markets (unlike American Markets except when corrected for trading volume), European markets are up today in the range from 5% to 8% this morning about half way through their day. But they now have a sell signal and America has one that only our readers know about.

US pre-market futures are up 3% to 4% today. Investors are in cash waiting for new opportunities to short the market. Since most think the American markets held resistance levels and did not yet give a sell signal we expect a dead cat bounce then a retest (buying opportunity) followed by a rising market and a failed test of the previous high (a selling opportunity. Both our first and second (volume adjusted) necklines did not hold so we are not done with this correction. The unadjusted neckline did hold so that is why we expect there will be a dead cat bounce.

John P. Hussman, Ph.D. this week reports:
"Greek Debt and Backward Induction
The bottom line is that 1) aid from other European nations is the only thing that may prevent the markets from provoking an immediate default through an unwillingness to roll-over existing debt; 2) the aid to Greece is likely to turn out to be a non-recourse subsidy, throwing good money after bad and inducing higher inflationary pressures several years out than are already likely; 3) Greece appears unlikely to remain among euro-zone countries over the long-term; and 4) the backward induction of investors about these concerns may provoke weakened confidence about sovereign debt in the euro-area more generally."