We know that the commentary is terrible at the moment that people are panicking over debt worries in Europe and a drop in the market.
However, I believe the market is near, or at, a short term bottom.
A 5 percent to 10 percent correction was normal and needed.
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The VIX is spiking, stocks are way oversold.
The number of stocks trading above their 20 day moving average on the S&P 500 is 6 percent — that is the lowest since March 2009.
On the dollar front, let us remind you that the European nations’ deficits and debt as a percentage of GDP are no worse than the United States.
At least measures are being taken in Europe to reduce the deficits — whether the measures will work is another question.
However, in the United States — where officials continue to print and spend like drunken sailors — there is no talk of reducing the deficit.
There was a large short position on the dollar and it is being cleaned out.
Everyone is now bearish on the euro.
The euro could fall a bit more, but in the short term, I am sure 1.35 will be pretty good support.
Deutsche Bank recently said the crisis in Greece and Portugal is just a precursor to the U.S. debt crisis. I could not agree more.
The big drops you are seeing in gold, Spanish stocks, silver — those are the big drops that happen near the end of capitulations.
You should buy on those drops, but most people are bad investors because they look for further drops!
One thing that is difficult for most investors is buying maximum pessimism.
People get scared and think things are the worst for the sectors that have the worst news.
However, often those hard-hit sectors are ironically where you want to buy.
Right now — as crazy as it may seem — you may look at buying in Portugal,
Greece and Spain, the countries which are being hardest hit.
Do not listen to the naysayers — in the short term, the market looks close to a bottom and rally.
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