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Stock Market Dead Cat Bounce —What to do...

Stock-Markets / US Stock Markets Aug 31, 2008 - 02:01 PM GMT

By: Money_and_Markets

Stock-Markets

Martin Weiss writes: Don't let last weeks rally in the Dow fool you. There are two crucial reasons why I'm convinced it was nothing more than a dead-cat bounce:

First, it was on extremely light volume. With most of Wall Street traders already on their Labor Day vacations, a handful of traders can easily move the market no matter how dire the underlying fundamentals are.


Second, the fundamental forces that caused this crisis — the number of mortgages going bad and the losses at banks, brokers and insurers — are piling up faster now than ever before.

Nevertheless, the Pollyannas of Wall Street — the same analysts who used to swear on a stack of Bibles that the mortgage mess would be "small" and "limited to sub-prime" — are out in force again, trying to lure you back into some of the most vulnerable stocks in the world today.

Mark my words: This credit crisis cannot end ... the bloodletting in bank stocks cannot subside ... the damage being inflicted on companies that need credit to survive cannot be healed ... and the carnage in the economy cannot be reversed ...

... until the cause — ever increasing debt defaults — is reversed.

Meanwhile, we have alarming reports that Florida's largest bank is now hanging by a thread and that news of a major bail-out could come as early as next week. Be sure to look for Sunday's Money & Markets for the full report.

And here's more help for you: Recently, we completed a startling new program, The "X" List, naming the banks we feel are the most likely to be in danger, and giving you explicit instructions on what to do about it. If you missed it, I suggest you click here to watch it now, before it's too late.

Plus, earlier this morning, my colleague, Mike Larson, sent you a blockbuster new report on the banking crisis which you must not miss. Click here to read it on the Web.

In the meantime, I wish you and yours a grand Labor Day weekend.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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