Dead cat bounce or does the equity market have what it takes to reverse that negative bear market stigma? As we highlighted over the last few weekly notes, we suspected the equity markets would bounce. However now, we feel that the euphoria has hit some technical levels that should put to test the veracity of this rally. We like to take a longer-term approach in times like this as everyone is all goosed up about the rebound, because fundamentally nothing has really changed. In fact, one can argue where fundamentals are concerned, the backdrop continues to weaken, global instability continues to gain, and the US government furlough seems to be foolishly overlooked.
One of the things we pride ourselves in is the fact that we do not take public information for face value, nor do we even contemplate the sources very much. That seems risky right, but in realty what we are being sold and who’s selling it are about as trustworthy as a 3 year old holding an ice cream cone without giving it a lick. In fact, we are inundated with various reports from all over the World Wide Web, main stream media, etc.