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U.S. Economy Set to Crash (Again) in the Second Half

Posted July 2, 2008

“It’s not a good sign when the (Dow Jones Industrial) index breaks down this way.” — Richard Russell, Dow Theory Letters

Blogger’s note: According to Smart Profits Report Managing Editor Martin Denholm, the U.S. economy won’t find a bottom anytime soon. We may have gotten past the first half of 2008 without a complete market meltdown (if you don’t count the Bear Stearns collapse, or $5 gas, or the real estate market coming to a screeching hault, or… ), but the second half of the year won’t be any better for the U.S. economy. In fact, it could get much worse. And that’s where Martin comes in. He recently told his readers about a few ways to prepared for the bad days to come. And I thought you’d appreciate a look.

by Martin Denholm

Baltimore – (TFN): The good news? We’re in the middle of a short week, due to the July 4 holiday, and just got rid of a gut-churning first half of 2008.

The bad news? There’s more ugliness to come.

The tale of the tape? The Dow Jones Industrials finished down 14% over the first half of the year. In June alone, the index lost 10% - pretty ominous for an index that Richard Russell, publisher and editor of the respected Dow Theory Letters calls the Dow Industrials “backbone of the US economy.” Russell states flatly, “It’s not a good sign when the index breaks down this way.”

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The $5 Billion Windfall Flying Under Wall Street’s Radar

While the U.S. economy sinks deeper into recession, emerging markets are firing on all cylinders. Governments are sitting on hordes of cash-but instead of investing in Treasuries like they used to, they’re now eyeing juicier yields. One of Asia’s most powerful government-controlled wealth funds is about to inject $5 billion into this American company…setting smart investors up with surprisingly fast triple gains. Details in your free report

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He’s right. That 10% fall was the Dow’s worst monthly performance since the Great Depression days of 1930 and is also the technical definition of a correction. And from its peak, the index has shed almost 20%, which economists consider to be official bear market territory. Firms like fallen auto giant General Motors (NYSE: GM) have led the way down. From its 52-week high of $43.20 on October 12, the stock hit a 52-week low of $10.57 on Monday - a 75.5% collapse. Read on to learn more.

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