W is coming

I predict (and betting on) a "W" ..... we are going to re-test the March lows in the next 6 months as the same problems on the commercial real estate side have not been resolved. Hundreds of billions of debt need to be refinanced. Massive govt stimulus is what's pulling the economy back into "growth", but underlying fundamentals are weak.

October saw two tops at 11,500 TSX and 10,000 Dow. When TSX broke below support at 11,000, the next support level is 10,000. US dollar also rallied this week - how can this be if the US govt is $12trillion in debt? USD should be devaluing not rallying.

These are signs that something is not right and contradicts logical thinking if the economy is truly on the mend. Of important note is more regional bank failures, increasing unemployment, increase in people saving and cutting back (really bad as we are a consumer based economy) .....

I don't plan to short the market unless I see a rapid deterioration in fundamentals. The second part of the W could be short - i.e. down 10 or 20% from here. Not worth the risk if it takes off after the drop. However, the key thing to keep an eye on is the USD and commodities, they are early indicators of what's to come. Strong USD means severe correction is anticipated.

last post, I was 75% cash, as of end of Oct, I am pretty much 99% cash. Sold all my trading positions in base metals, oil etc when my stop losses were triggered last week. Hoping for this "W" to happen.

Watch list:
precious metals: G, ABX, K, ELD, PAA,
Metals: LUN, IVN, S, DML, AVL, TCK.B
Oil: COS.UN, SU, ECA
Banks : TD, BMO, BNS
others: RIM, AGU, POT, MGM, LVS


If I am so fortunate to be correct in my prediction, this time when I load up I will be holding for the long haul. Strategy is to accumulate at target "discount" prices.