Well, the market has had its worst start to a new calendar year in as long as I can remember. Three trading days into 2008 and the S&P 500 is down nearly 4%. These three days have wiped out ALL of the S&P gains from 2007.
The Fed will certainly cut interest rates this time around, but it probably won't be enough to reverse the market and send it shooting upwards. What the market needs is a real catalyst, and I don't see one lurking around the corner. Many economists are saying that we are probably in a recession, and I agree with them. All indications are that business is slowing down a little bit. That means all of the up and down movements in the market are just noise.
However, that noise helps our strategy a great deal. We are pointing towards an up month so far. What we don't need now is for the S&P to blow through 1400 and head straight for 1300. While our strategy would do fine, it could potentially scare off other investors from the market.
There will come a time when the big financial institutions that have been getting crushed for months will be a slam dunk buy. But there is probably more blood running in the streets before we get to that point
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