NEWS AND COMMENTARY
August 13, 2001
Rally Chances Slip-Sliding Away
Anybody who has been regularly reading our commentary on the markets and the economy knows that we are forecasting another major downturn for most stocks. The economy has shown no clear indications that it has begun to recover. If anything, consumer spending, the lifeblood of the economy, is starting to thin. Plus, earnings for the second quarter were dismal, and few companies can make any positive predictions about the second half of the year. Despite all this, last week we watched the markets very closely for signs of a bear market rally.
However, the subtle signals that we spotted never amounted to a red flag. In fact, the indicators now point more to another move down rather than to a move up. And we believe that move down could be big.
Investors are going to have to face the facts this week as a slew of economic data hit the papers. Retail sales are expected to show lilting consumer spending patterns, and already pathetic industrial production most likely will sink for the 12th straight month. These are just a few examples of the continued weakening of the economy ... and just a few of the reasons investors may soon run for the exits.
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