Wednesday, February 25, 2009

Worst Timing of the Day: U.S. News & World Report

"Obama Speech Worked: Expect Rising Stock Market and Poll Numbers"
-Mary Kate Cary,
USNWR's Jefferson Street blog

The Dow Jones Industrial Average was recently down 151 points at 7199.

How's this for a scenario?
Mary Kate is right, just a bit early.
Later this year the stimulus adds 1-1 1/2 percent to an economy already self-recovering, setting up a year-and-a-half long bull run to, let's say DJIA 10,500 or 11,000, completing the right shoulder of the decade-plus head and shoulders formation on the Dow and expanding the Democrat majority in Congress.

Followed by realization that all we've done is blown another bubble, perhaps nuclear war between Israel and Iran or Pakistan and India, pandemic flu, and a decline to the price level of the second leg of the Big Bull, 1994's 3500 or so, a 75% haircut from the 2007 highs.

Just a little ray of sunshine aren't I?
From Tuesday's post "Are we About to See the World's Biggest Head-and-Shoulders Formation?":

The DJIA - 1956 to 2009 (Click to enlarge - without the scribblings).