Does America Need A Recession?

While I don’t agree with Paul Farrell’s view very often, he did write an interesting article called “17 reasons America needs a recession.” In case you missed it, it’s a worthwhile read, and he addresses some of the at times hidden benefits a recession has to offer.

While I am not in the prediction business, my indicators clearly show that we are nearing the end of the bull market. Of course, things could change any day, but I don’t see how the problems that I addressed in “The Melting U.S. Economy,” could simply disappear overnight.

The only way to get these issues resolved long-term is via a process I would call “wringing out the excesses,” which I believe can only happen via a recession and an economic contraction. While all signs point in that direction, we have prepared our portfolios to deal with that possibility.

Yesterday’s drubbing of the markets took our International Trend Tracking Index (TTI) down to -3.41% below its long term trend line confirming our bearish mode in that arena.

Our domestic TTI has held on a little better and has now moved to +3.49% above its long-term trend line. While that puts us technically still in a buy mode, we are only holding on to those few positions which have not gone through their pre-set sell stop points.

As a regular reader of this blog and my weekly newsletter, I hope that you have done the same with your portfolio.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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