Tug of War

7:15 DJIA 8582 +63.72 VIX 70.07 Gold 711 -24.20 Oil 67.76 +1.01
The Bad News
The number of U.S. workers filing new claims for jobless benefits rose by a larger than expected 15,000 last week, government data on Thursday showed, reinforcing evidence about the weak state of the labor market. You are going to hear alot about this for months. The story will be the economy can't grow with a weak job market.
If you think the economy looks bad now, imagine this:
An unemployment rate above 10 percent for almost a year.
A 82-percent increase in the number of unemployed in a three-year period.
A 7.8 percent contraction in the gross domestic product in one quarter alone.
An economy that doesn’t grow for two consecutive years.
Those are some of the things that happened in the long and nasty recessions of 1973-1975 and 1980-1982—and could happen this time. Though few are predicting it'll get that bad, most economists say the current downturn will be far harsher than the blip of the 1990-1991 or even 2000-2001 recessions.

The Good News
Interest rates are falling
Oil and commodity prices are falling
The credit Freeze is thawing
Trillions of dollars are being mainlined into the banks.
Hedge funds are delveraging

The system needs instant relief. The emergence of Hedge funds with their leverage has magnified the price swings in stocks and commodities to the extent that prices are not real. If you are looking at a price for any stock now it is not a true reflection of anything other than it is the result of foced liquidation by the leveraged hedge funds being forced out. What used to take 2 years is now condensed into 3 months. This is creating a below market valuation on stocks.
Investment demand or selling exaggerates price moves in both directions. Prices in the markets today is the result of alot of money chasing or leaving on that day.
The past 3 weeks we have seen wave after waves selling hit the market. These selling waves are about forced liquidations. The other side of these waves is the FED pumping liquidity into the system. They are creating the liquidity necessary to reflate the economy.
When the forced liquidations end all that is left is the liquidity and no sellers.
That is where we are going to be in a relatively short time. One day you will wake up and prices will be up 50% and prices will be back to fair market value.
In my opinion I see these waves slowing down now. I think we are getting late in the lquidation game.

The tug of war is the forced selling accompanied by the bad news. This is the obvious. The good news is that the unseen hand of buying. The obvious is that things are bad and are getting worse. The good news is that something is being done about that and the prices are discounting something far worse than I can imagine given the amount of liquidity I see (unseen hand) coming at this thing now.