Today stock markets are springing back on low volume from a streak of losses in December and year to date. Big bursts of headline-hope is a recurring feature of on-going bear markets. Today there is another wave of relief inspired by the idea of magic in the next bail-out plan in Europe. The meaningful test will come after the tinsel and holiday cheer as we move into the first quarter of 2012 and Europe continues to list in recession and financial crisis, China continues to slow and the US enters into the next and third recession since this secular bear began in 2000. The Chinese stock market has led global markets over the past few years and has recently broken below another level of downside support, now at 2215. This is down 30% from the most recent peak and a full 60% below the 2007 peak. Most importantly there is no bottoming evidence so far in sight.
With few participants, and money managers scampering for year-end window dressing, everything can happen day to day over the next couple of weeks. But so far, lumps of coal seem the most likely present left to Santa Claus believers this year.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.