Good morning,
I thought it would be a good idea to post additional comments regarding the FED and what they should be doing vs. what they are currently doing regarding the credit crunch that we're currently experiencing. The so-called experts continue to tell us that all is well and that there's no need for the FED to lower rates. Injecting liquidity into the banking system, as the FED has been doing until today, will be sufficient to keep the system afloat. Well, I happen to disagree and that's certainly my prerogative. The facts, as I see them, don't support the theory that this crisis can be contained by the recent actions by the FED. We have never, at least in my life, dealt with a situation like the one we currently have in housing, credit, and financial markets in general. There's no crystal ball that can guide us or give us a look into the future. I was speaking with a friend of mine the other night and I offered my favorite analogy for events such as the rapid acceleration in real estate prices from 2002-2006. The farther you stretch the rubber band the more violent the reaction when it snaps back. Sometimes the rubber band breaks when it has been stretched beyond its capabilities. That may have occurred and nobody has recognized it. Because it hasn't happened before doesn't mean it's out of the realm of possibilities. Well, the DOW is down 156 points at 11:16 AM this Tuesday and the market certainly seems to be telling us that all in NOT well in the world. It will be interesting to see what happens when we revisit 13,000 in the DOW. We'll stay short until the market tells us to do otherwise.
Dale F. Doelling
President and Chief Market Technician
Trends In Commodities
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