-The BAM model is showing a very good probability that, during the next 8 months or so, we could give-back all of the gains made since the August 2004 lows.. in the case of the INDU and SPX, we’re talking about the 9700 and 1060 level respectively. 

-The massive amount of easy money that’s been fueling private equity deals is obviously generating tons of revenue for certain players in the XBD.  Why then–even prior to the Bear Sterns hedge fund blow-ups—is the XBD lagging the general market?  Not a day goes by that I don’t hear someone talking about how “undervalued” the financials are yet they’re leading us down as they break to fresh lows ahead of the general averages.  The XBD, in our work, looks as bad up here as the HGX index looked at its summer peak in 2005.  Back then, we called for a multi-year collapse in the HGX even though the analysts were talking about a bright future (and moving estimates higher) and now we’re calling for a multi-year collapse in the XBD even though they’re (analysts)  calling for a continuation in large fees generated by private equity deals and a booming stock market.

Full report coming soon