Could there be another economic downturn? I think so. I personally believe that the unemployment numbers are being fudged so that things appear rosier than they really are. I also don’t see any improvement in our export numbers. But not only that… what has the billions upon billions of dollars in bailouts done? Where is the safety net that was supposed to be created or at least an equilibrium? Even real-estate is still going down in overall price per unit. Remember, there has been no recovery in history without a recovery in real-estate.
According to an article at bloomberg.com – Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
He is not the only financial power player stating this or something similar. Run a search and you can find plenty of excellent resources on the doom that may soon arrive.
Now let me show you something so you can get a real understanding. Take a look at the following charts from Yahoo Finance:
Here is a chart for the DJI (Dow Jones Industrial Average). Notice the “W” shape in the trend (to the right). There is no reason for the trend to break upward and blast through resistance around 14,000 (the middle peak). We have been riding an overall ascending triangle for most of the history of the market. It is more likely that we will go down again in a big way.
The above chart is for the S&P 500. It is nearly identical to the DOW and it also has no reason to blast upward in the current economic climate. We probably have a rough road ahead.
Keep your eyes open!