Consumer Confidence and the Market (6/04/08)
Last week, consumer confidence dropped to its lowest level in 16 years - and this drop took the current consumer confidence readings down to a level we've only seen only five other times since 1967. According to a study by JP Morgan, every time that consumer confidence has dropped to these low levels, we've seen a rally soon afterwards. For example, in every case over the last 41 years, the S&P 500 has averaged a 15% return over the next 6 months after hitting these lows.
That's quite a powerful statistic, especially when you consider a Dow chart that looks like the one we have now.
So my recomendation is to wait for a bottom in the next couple weeks and buy the QLD or the SSO or both for a potential 20 to 30% gain in the next six months.
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