Nouriel Roubini on the stock market

Intervie with Nouriel Roubini: The $700 Billion Bailout Isn’t Enough (from U.S. News & World Report)
December 18, 2008

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Do you think stocks have bottomed?
No, I don’t think so. Of course, in the last few weeks we have been in another bear market rally, but bear market rallies have occurred for the last 12 months. Markets rally after shocks, and then shocks come and they fall further. But I see another downside to U.S. and global equities of at least 15 to 20 percent from current levels for three reasons. One is that the news about the economy—both in the U.S. and abroad—is going to be much worse then expected. The numbers have been just awful, and they are going to get worse. Two, there is still a lot of delusion about what earnings are going to be in 2009. And three, I think that there are going to be many more financial shocks, other large institutions going bust—highly leveraged institutions like hedge funds.

Unquote

My View: I have felt that the current up move is a bear market rally. Bear or Bull, a rally should be used to buy. The charts will often give us signs of trend exhaustion. To change our view from bullish to bearish we have to wait for a change in trend. This has not happened yet.

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