Obama Scales Back Promises: Will That End Stock Market Consolidation?

OK, Obama’s almost in office.  He’s one week away from getting the keys to the kingdom and already he’s starting to back pedal.  He’s looking to ask Americans to start to make a “personal sacrifice”.  Yeah, like they haven’t made any yet? In a sound bite yesterday, he suggested that everyone needs to have some “skin in the game”.  Skin? We’ve already been stripped of our skin.  The US political system has gotten all the skin from its citizens; they’ve stripped us all down to the bare bones.  In fact, they’re starting to pull fingers and toes from the bare bones. “Skin in the game” - I’ll remember that one.

I think that this is a real important message that he’s trying to send to the American public.  It’s important for several reasons.  First, perhaps now he’s truly aware of the scope of the problem.  Now that he’s been briefed by everyone, perhaps he’s starting to realize how dire the situation may really be.  Second, it marks the day - 1/11/09 - that Americans are going to come to the realization that there is not any “magic elixir”.  Obama does not have any special magic wands that he can wave to make it all better.

America has been living in a dream world with regard to Obama - and quite honestly, politics in general.  Americans have bought into the campaign rhetoric that it can be fixed.  It’s really broken.  It’s broken badly (the economy) and it’s going to take major changes, revolutionary in scope (I believe) to begin to heal this nation and put us back onto the proper path.  We may not see the improvements in our generation (my generation) and I’m 47.

Obama is suggesting that he may not be able to accomplish his goals on the pace that he had hoped.  I’m not sure that anyone with a brain really believed that he would be able to make the changes as quickly as he explained during his campaign, but this is really the first time that he’s verbalized it to the American public. He’s trying to be honest I think, or was he just lying during his campaign? Who knows.

Depending on what’s coming down the pipe, in terms of additional economic bad news, people could start to become frustrated or angered.  It will be real interesting to watch the mood of the American public over the next several months.  It’s this collective behavior that will play a huge role in determining the direction of the stock market.  Obama may have already sealed his fate.

The stock market has been in a consolidation phase since we made the initial low in October of last year during the week of  10/6/08.  The market made a subsequent low the week of 11/17/2008, and many believe that this will be the bottom. There are also many that think that we will break those lows and head sharply lower.  This Wave 4 consolidation is the “Obama Consolidation”. With his words yesterday, he may have ended this consolidation. We’ll have to wait and see.  Watch market action next week.

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