What is a double dip recession?

Resembling a mythic beast from a childhood tale that magically arrives to life, investors are unexpectedly faced with the very actual chance that we may actually face a double dip recession.

Investopedia defines a double dip recession as: "While gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by next recession."

Remember, in markets, belief is the only truth that matters.

Currently, market participants are in fact concerned that the global recovery is in serious danger. As we experienced in the year 2008, recessions destroy profit visibility. When institutions have no profit visibility, they sell stocks. That is in fact as simple as that.

Let us not move further on of ourselves yet, although -- this is still too early to inform if the growing monetary recovery is ended or just picking a breather.

We are incredibly oversold, and positively due for several kind of relief rally. Though, it's always hard for me to view this pullback as a fresh buying chance.

My issue is that I'm struggling to see where the next wave of big growth will come from.

Driven by incredibly lax financial principles, and good old fashioned company thievery, China seems being on the edge of its own banking problem. Therefore I do not ensure China coming to rescue of the global financial system.

The US is gradually crawling back, however the typical US customer continues to be 15-30% under water on their home, and still mired in personal debt. While all that could be right, yesterday's consumer confidence information are pointing to a further confident customer. Consumer Confidence rose to 63.3, up from April's 57.7. This was almost 4 points enhanced than projected.

The only trouble by this number is that it does not take into consideration the recent market failure plus the insanity going on in North Korea currently. (North Korea sunk a South Korean Ship, they deny it, has threatened war, and now have at present stop all ties with South Korea.)

The 3 keys for return of the US customer are job growth, job security, as well as access to credit.

The majority think that if they have not been let go yet, then they perhaps will not be. This helps people feel safer of their employment. But, a crashing stock market doesn't bode well for increased corporate employment.

Latest financial regulations functioning their direction through Congress may finish up restricting credit for small organisations as well as individuals. Thus I don't imagine a new credit boom leading the way forward anytime shortly.

So, with no having access to simple credit with a steady source of new nice paying employment, I be able to actually tell that I've no thought where the energy is going to come from to find customers spending yet again.

And then we've Europe ...

The problems in Europe are very real. These guys fired a trillion dollar missile on their sovereign debt problems, but it even doesn't appear to be enough. The European financial institutions are into serious, serious trouble. And see if the European financial system slips back into recession, you will short the complete European bank sector into the ground. I still believe that the European financial institutions are a short on almost any prove of strength.

Thus it really is difficult to me to see the bull occurrence at this time, however although it always is while things seem this bleak. Seeing that oversold as we are, I am not seeing the kind of entire devastation that one generally sees at a capitulation bottom.

Therefore, long story short, in lieu of an announcement of particular form of transformative strategy response, I am likely to address any rallies with skepticism plus make a mistake on the short side as opposed to the long side.

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