At the top of this post you will see an image of today's front page of The New York Times. This is the first time in quite a while that the stock market was mentioned in the headline. It is a very subdued mention. But it comes a month after the "Apocalypse Now" cover in Newsweek. And the S&P 500 is below its 50 day moving average (blue wavy line on the chart) and above a rising 200 day moving average (red wavy line).The credit warning by S&P for the USA is complete nonsense. The US governments debt is denominated in dollars which the Federal reserve can print at will. There is no chance whatsoever that the US will default on its dollar denominated debt. Yet on the news yesterday the S&P 500 dropped nearly 2% within an hour of the announcement. Dumb selling if ever there is such a thing.
I think the aggressive contrarian should move to an above average long position from just an average one. Before anything resembling a bear market develops in the US stock market I think we shall see the S&P at 1500 and the Dow at 14000.
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