The economic negatives blowing around the world were already bad enough. But they continue to worsen.
The Organization of Economic Cooperation and Development said this morning it expects economic growth in the G7 developed economies will be less than 1% in the second half of 2011.
And after just a one-day bounce, European stocks are back down this morning in reaction to the European Central Bank cutting its euro-zone economic growth forecasts again this morning.
Reports this morning are also that anger over the way Greece is dragging its feet on meeting the austerity targets required for its debt bailout, has other euro-zone countries suggesting that Greece be expelled from the 17-nation euro bloc. Probably just a scare tactic to force Greece into action, but it doesn’t help boost deteriorating consumer and business confidence in Europe.
In Asia, Fitch Ratings warned last night that it might have to downgrade China’s credit rating within two years. Fitch cited the problems China’s banks are having with the heavy debt loads created by the country’s efforts to support the economy during the 2008 global financial crisis.
Fitch warned that Japan faces an even greater risk of a credit rating downgrade, given its huge public debt load and the political deadlock that’s blocking efforts to tackle the problem.
Haven’t we heard of both problems somewhere else, maybe closer to home? Problems with heavy debt loads created by a country’s efforts to support the economy during the 2008 global financial crisis, and political deadlock delaying efforts to come up with plans to tackle the serious problem with government deficits?
To read my weekend newspaper column ‘Why a Recession and Bear Market May Now Be Inescapable!’ click here!
Has Short-Term Oversold Rally Stalled Again Already?
On Tuesday, after a 500+ point decline over the previous two days in reaction to the dismal consumer confidence and jobs reports of last Thursday and Friday, our early morning indicators were calling for the Dow to be down another 300 points in the early going Tuesday.
I showed you this chart.
In the subscriber’s ‘premium content’ area, I showed a more detailed chart, and advised not panicking, that a further 300 point decline would only bring the Dow down to a test of the lower limit of the rising trading band that has been in place the last few weeks, and “Let’s see if it can hold above that potential support and remain in the pattern of higher lows and higher highs”.
And on Tuesday, the market did plunge 300 points in the early going to exactly touch that potential support line, and bounced 200 points off it to close down only 100 points. And it then closed up 275 points yesterday.
That has it already more than half way back up toward the upper limit of the trading band again.
But this morning’s early morning indicators are calling for a somewhat negative opening this morning. The brutal short-term volatility continues?
Images: Flickr (licence attribution)
About The Author
Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily Internet blog at www.SyHardingblog.com. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!