This is The Wall Street Digest Hotline Update for Tuesday, December 23, 2008, at 6:00 p.m. EST.
Existing home sales plunged in November. At the close, the Dow sank 100 points, closing at 8,420, while the Nasdaq lost 10 points, closing at 1,522. The S&P 500 fell 8 points, closing at 863. Oil closed $0.93 lower at $39.13 per barrel, and gold closed $9.10 lower at $838.10 per ounce.
The economic news is bad and it will get worse. The economic data is signaling a deep global recession
Existing home sales fell 8.6 percent in November. Home prices fell 13.2 percent year-over-year, the biggest decline on record. Analysts expect home prices to plunge further as foreclosures rise and unemployment continues to rise in the coming months and years. Economists expect unemployment to finally peak in 2013. The Fed, the U.S. Treasury, and Congress have done nothing to stop falling home prices, which is the principle cause of the deflationary credit collapse.
The Kress major market cycle bottomed on Monday, December 22. I expect a bear market rally to unfold between January and July 2009. This rally may or may not post new highs in 2009. This will be a temporary bear market rally, not a new bull market. I continue to believe all of the bubbles including commodities will burst by mid-2010. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth will turn negative by mid-2010.
The Wall Street Digest's office will be closed Thursday and Friday, December 25th and 26th, 2008 in observance of the Christmas Holiday.
The next Hotline Update will be on Tuesday, December 30, 2008, at 6:00 p.m. EST.