5 Reasons Why the Market will Drop by q1 2008

November 28th, 2007 | Posted in Investing, Stocks

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5 Reasons why the market will drop by q1 ‘08:

1. Retail sales are going to come in extremely weak over the holidays.
2. Sub-prime & other hidden derivative losses will keep coming out over the last quarter and q1 08.
3. Fed will cut rates down to 3% perhaps even 2.5% further weakening the dollar. This should cause an outpour of foreign capital from the stock market.
4. 10 year treasury yield has already dropped to 4.06%. This is a bearish indicator for the economy.
5. Lower rates won’t actually stimulate the economy, but will lessen a recession.

Put it in Reverse

You can make money when the market goes up, but don’t forget that you can make money when it goes down also. Use reverse ETF’s such as RSW to bet against the market.

RSW should see a 10% move up by the end of Jan ‘08 in my book. RSW came out only on Nov 8, but is already up 5.62% against the S&P 500 which is down 2.37% over the same period.