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... Will End With A Crash
-- January 2, 2003

Stocks are embarking on their fourth year in a bear market. They may have started out with a triple-digit rally, but they will, in our opinion, take a major beating as the year progresses. After all, the fundamentals still stink. And no amount of wishing and hoping is going to turn this economy around.

Just take a look at the latest manufacturing survey. This survey is a leading indicator of what the manufacturing industry expects for the months ahead based on current activity. However, the survey was conducted during the first two weeks of the month. Back then, manufacturers were flush with hope that the surge in buying after Thanksgiving would last throughout the month and translate into more businesses for them. Boy, were they wrong! And next month, this survey will reflect their disappointment in holiday sales.

Plus, unemployment claims are on the rise again. Initial jobless claims are back over the 400,000 mark. Companies are on firing sprees once again. That tells us that they, too, aren't optimistic about an economic recovery!

Add that to plunging consumer confidence, and you've got a recipe for another crash in stocks. Consumers carried the flag for the battered economy last year, but they're about to surrender. The economy's last line of defense against recession is about to fall. And stocks will come down with it.

related article: Stocks Start Year With A Bang