It's Decision Time for the Markets

So the time has come for the market to make up its mind. I don't think it will be in the upward direction. The market rallied furiously off the SocGen lows of January 21st. Many market pundits constantly call for continued rally and many are speculating on market bottoms. Behind the back drop of the continuing deterioration of the credit markets which now include bond insurers and municipal bonds, the "subprime" contagion is not only NOT contained but has grown like a terminal cancer.

The amusing thing about the bond insurers and the rating agencies are that the very function of the rating agency's job is to "rate" the health of the companies. In the case of AMBAC, MBIA, FCIG, etc... they are insolvent. That is why there is continued speculation of failed capital infusions and talks of splitting up the company into "good" company and "bad" company. Is this even fair or logical? I think we are in the precipice of another shoe dropping.

The market has thus far factored in that perhaps the worst is over and that the subprime write downs and constant issues associated with it has been past. But that is not the case as everyone who is remotely conscious will tell you. And those that constantly wax optimism about the economy and the stock market have sinister ulterior motives.

The market has sold down every rallies. Those who proclaim that this may be the most important buying opportunity are misleading the sheeples that choose to listen to them.

Northern Rock just got taken over by the government. This is not a good news. This proves the menacing tentacles of subprime that is now only rearing its ugly head. We are in for a deep recession with much pain. I believe we are setting up for another leg of the market plunge and I feel sorry for those who bought on the advices of mad men such as Cramer, Kudlow, and many other analysts who are always wrong.

Take caution. We are just beginning.