U.S. Stocks To Recover?
Thus, a short-term recovery in stocks after the 14% decline since May 19 seems likely soon. With the worries created by Fannie Mae's & Freddie Mac's problems and the collapse of IndyMac, stocks may fall on Monday and perhaps a few days more, but a temporary bottom and following rally nevertheless seem near. However, because stocks are still fundamentally overvalued and because the underlying economic fundamentals are deteriorating, this rally will likely be another sucker rally. And with money supply growth showing signs of decelerating and with virtually all of it going into bidding up commodity and other goods prices, this sucker rally will likely be weaker and shorter than the one that started in Mid-March.