Although Friday's gains gave a little relief after the 10% losses of the previous two sessions, they came on light volume and as such did not convince us that the overall downward trend is broken. In fact, as the economic news worsens, not just in the US but around the world, it is becoming more and more certain that we are in for a prolonged and deep recession. If so, there are further gains to be made on the short side and very little to be gained by going long. As we show in this weeks Top Tip, our short side selections have been very successful and as a group have given much better returns than would have been obtained by shorting the major indexes alone.

Friday's unemployment figures were bad but because they count only those actively looking for work they do not count those who have given up or are on shorter work weeks. So the unemployment figures are actually much worse than the headline number suggests. Commentators on the News Hour Friday night estimated that the real unemployment rate is 11% and could grow to 15% in coming months. This will clearly be devastating to the economy and it is essential an effective stimulus package be enacted quickly. The market action on Friday indicates some investors are anticipating such a package and that regained confidence, when it is enacted, will lift the markets higher. We think there is more downside potential than upside.