Monday, March 23, 2009
Hysteria Takes Hold
I do a lot of reading and web-browsing to try to get a sense of the spirit of the times. I believe that despair has engulfed the elite opinion makers and leaders in the USA. The latest product of the House of Representative, the 90% tax on bonuses, is a clear symptom of the now mindless response that people have to developing events in the financial crisis.
The latest cover of Time magazine is also interesting from this perspective. It depicts a bomb labeled AIG with a burning fuse, described by the caption as a weapon of mass destruction. The fact that the fuse is burning conveys a sense of potential disaster ahead.
Paul Montgomery's magazine cover indicator would rate this cover as a buy signal for AIG stock which would become actionable about a month from now. If AIG is a buy then the financial crisis is just about over. This squares with my belief that sentiment is so bearish now that even a return to just modestly bearish sentiment levels would push the S&P over the 1000 level.
Added later: I just appended this week's Newsweek cover to this post. It makes my point exactly.