I have been purposely reluctant to be calling for a double dip for the past few months because I was afraid that people would tend to just 'tune me out' and call me a crazy person in the face of a rallying stock market. I have officially changed my stance as of today, the first day since July 2008 that the market has closed below the S&P 500's 200 day moving average.
The bulls' main argument against another deep correction is that earnings are very good. This is of course a short-sited argument, but very typical nonetheless. Fundamentals always look good at the peak in a market. That's WHY it's the peak in the market. With the entire global economy in debt-ridden turmoil, future U.S. company earnings are bound to be seriously impacted, and the stock market is now anticipating this. But the United States debt is one of the worst in the world... do we really expect to come out of this unscathed? Furthermore, the fear that this correction brings on will snowball to the downside. As is typical in every market cycle, the markets will overcorrect and stocks will get extremely cheap. A deflationary period is imminent which will cause a double dip recession. I expect 5000 on the DOW.
Prepare yourselves for a wild ride. It gets ugly from here on out.
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