Expect one more round of fireworks from the stock market before a massive collapse
Sam Adelton
Jul. 13, 2007

I wrote in India Daily that the stock market would make one more sets of new highs before the final long-term bear market starts. We got the start of the fireworks today. Expect some more fabulous rallies like in March 2000 before the market finally says goodbye to the recent bulls.

The retail sales were better than the gloom and doom predictions. But did you watch the indicator that tells how much of the retail sales surge is on borrowed money? Almost 88% of the retails sales hope is on future payments. Did you watch another thing – the shorter end of the yield curve did not move at all.

The market wanted to finally blow up – it needed something to start the rally. Wal-Mart, Home Depot, and the similar stores are bearish. The high-end stores feel the pinch last. The market rallied based on a massive short covering.

Those who covered short are actually smart. The market has more firepower. In a few days you will more than 400 points rise in Dow. That is how the final blow off happened in year 2000.

But by end of the year Dow should be 25% lower than a theoretical top of 14,600 – that takes it to 11,000 by end of December.

The sentiment, fundamentals, and analytics are all pointing lower. Interestingly the September eurodollar futures are actually gaining ground making ground for Fed to cut rate in a couple of months.

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