THIS COULD BE IMPORTANT

bull and bear alike will soon know if the recent market rally is the beginning of a new bull market or if it was just another in a 3 year long series of bear market rallies that end in further destruction of capital. what seems fairly clear is that the market looks like its getting ready to decide. since the pre-war lows in early march, the broad market is up some 25% and individual stocks are up much more. that gain was made by early june and since then we have made no further gains. in fact today, the broad market closed at its lowest level since early june. and that i might add, is down some 8% from its recent top in early july.

some companies literally "back from the dead", as the credit markets unseized and liquidity was poured back onto them. now, if the business revives, they will live on. if business does not recover, the equity will evaporate once again. if the later is the outcome, the next downturn will be disasterous for newly recovering investors. the latest rally has done great things for investor confidence and consumer confidence. to disrupt that confidence would create, in my opinion, a race for the exits that would be historic.

i dont mean to sound alarmist, but with the latest upgrades in consumer technology, every single investor now has cnbc, a pc, and a high speed access. they have all been watching the market for quite some time and they have all seen some pretty unexplainable things and lost lots of capital watching. so my guess is that next time things start to look crazy, i think they might all hit the "sell" button at the same time and well, you know what happens then. last one outs a rotten egg. then they'll become "long term" investors again.

have a grateful day!

larry