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Time for Trendsetting; Main St. too Bearish?

April 14, 2008

Last week we saw an extreme Main Street sentiment indicators.  Quite simply put the left-winged controlled media has driven fear into Main Street.  The constant drummed beating of how bad the housing market, subprime loans, and the fall of the US dollar has finally sunk into the minds of Americans.  It is uncanny how the media can constantly beat into the minds of their viewers, even Fox News has beaten this drum.  Are things really that bad out there?

Here are two important sentiment indicators:  University of Michigan Consumer Confidence and IBD/TIPP Economic poll.  The University of Michigan Consumer Confidence  poll registered a 26 year low reading while the IBD/TIPP poll sunk below 40 for the first time in its history!  Main Street is telling us that they believe things are really bad out there.  Many believe we have already hit recession and that this may be the worse one EVER.  Are we in a recession?  We won’t know until 4/30 when GDP is released (prelim) for the first quarter.  Remember, Q4 GDP (annualized) great at .6%…a reading below this would signal two straight quarters of declining growth or recession.  Without knowing that number, you have no idea whether or not you are in a recession.

Wall Street doesn’t seem to know what to do.  The lack of volume is showing that the big boys are clearly not making any bets at this point.  Record number of cash as a percentage of holdings is what we are seeing.  Is this setting us up for something?  NYSE short ratio is at 5 year highs, if not all time highs.  Could a massive short squeeze then supported by big institutions with cash at stake?

Too many questions that will be answered, the real question is are you prepared for the situation at hand?  I am positioning myself with cash and with quality growth stocks.  At Big Wave Trading we are telling our subscribers the same thing!   I profiled one stock yesterday:  PWRD.  I will be profiling more later, just stay tuned.  There are nice growth stocks that could be setting up.  Whatever the case may be, I will be ready for whatever comes.

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