Now that the recession is official, many are taking their queues from economic data and yesterday we saw very negative readings on ISM. In fact, the worst in 30 years. This shockwave sent the markets down sharply, giving back much of last week’s gains.
While yesterday’s vicious selling may seem overdone, and may even yield some light buying ahead of the next wave down, I believe we are simply confirming the six month falling wedge pattern and will be retesting the intraday lows of 741 in short order.
On a side note, the tremendous easing the Fed is implenting by buying bonds, cutting rates and opening the lending windows to all will eventually yield to a very inflationary environment. Commodities and currencies will begin to become attractive early in 2009.
