Fear Is Rising To Extreme Levels

The most important evidence that the level of fear is rising to levels not seen since perhaps the 1970s is that calls for significantly lower lows in the Dow are making headlines in mainstream media. Peter Eliades was featured on CBS Marketwatch calling for Dow 4000. Of course, if you listened carefully to the interview, he qualified that statement by saying that the 4000 level was not likely near term, but Marketwatch only headlined the 4000 number. On CNBC Fast Money last week ( I rarely watch this show, but sometimes it is entertaining.) none of the panel was willing to suggest taking a long position. I don't recall hearing such a uniform bearish stance out of this group. Of particular interest is that even leading politicians are willing to go on TV now and state emphatically that the economy is going off a cliff. Lastly, today I saw another elliott wave forecaster with the current count as intermediate wave (3) of primary 1 instead of intermediate wave (5). I am not saying that primary wave 1 is finished, but now that everyone seems to be lining up with the bears it seems like the room is a bit crowded.

As far as the economy going off a cliff, I think it went off a cliff last fall. Now it's trying to get some legs and stand up. I know that seems contrary to popular opinion, but I am seeing evidence in some areas that business is picking up. My business colleagues are getting work, although not as easily as in the past. I just got news today from my realtor that she has two very interested clients in the four townhomes that I have been sitting on since last summer. I got one under contract last week with a closing date of April 30. She is expecting another offer by the end of the week. From July 08 to January 09, we literally had zero prospects. So it's not all bad.

Conclusion: there are a few short opportunities, but extreme caution is advised. Regardless of whether or not the coming rally is intermediate wave (4) or primary wave 2, a rally is coming sooner than later.