Bailout Rumors are Bearish
From Hussman:
The most depressing display of math-illiteracy by investors last week was the excitement over a report suggesting that France and Germany had agreed to a 2 trillion euro bailout package for Europe, which triggered a "risk-on" tone for the rest of the week, even after the report was retracted as inaccurate. Notably, 2 trillion euros is more than the GDP of France, and is half the GDP of Germany and France combined. Moreover, Europe has just gone through a tooth-pulling process just to approve 440 billion euros for the European Financial Stability Fund (EFSF) from all EU members combined.Repeating a pattern from 2008: massive rallies in response to bailout "plans" that are either untrue or irrelevant.
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Actually, both earnings and guidance have been at least decent*, and "investors" seem to have decided to focus on that rather than on sovereign debt issues. So it again seems to be 'Warning Will Robinson!' when thinking about shorting the market.
*The NFLX "death spiral" is almost here.
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