Price action is bullish. There, we got that out of the way.The technicals on the Dow however, continue to meander along, slowly degrading as the dumb money becomes emboldened. I guess I am becoming something of a perma-bear, but then again I was persistently bullish beginning a year ago. Good things take time.
So the Dow rises higher as casino patrons place their faith in macro monetary policy micro-managers and their ability to control the markets, all knowing and all powerful. The US currency - virtually the counter party to the world - continues toward would-be devaluation.
From this mix springs the 'take the longest term mortgage you can and put your money in stocks' tout, the 'silver is undervalued compared to gold' tout*, and a chorus of "I told you so's" from smart alecs the world over who, in reality, were nowhere to be found when the bullish play was originally ready to roll.
I tell you again, I never heard from one single stinking bull in Q4 '08/Q1 '09**, but the deflationists were on 24/7 and you couldn't write something bullish without hearing from them. It is really interesting how these psychological swings get corrected, isn't it?
* Speaking of silver, a reader asked why an SLW post was removed yesterday and it is because I unwittingly used a linear chart, which showed a more bearish interpretation than the normal log charts I use. So in the interest of consistency, I removed it. I am still bearish on SLW however. When it was in the 2's and 3's, I was buying with both hands. But that was in a different lifetime, all the way back to a year ago.
** Well, I heard from one bull. A subscriber who runs a firm in NYC noted to me his bullishness and that of a legendary trader who was coming to work at his shop as he had never seen such an opportunity for "picking off the sissies".
Ah heck, let's reproduce it below as part of the NFTRH 1 Year Ago series. Excerpted from NFTRH9:
An email from another NFTRH subscriber who is a Wall Street long-timer and whose level of experience makes mine look silly:
Yes Gary, I spoke last night with one of the legendary street traders from the old days (pre 1990). He wants to leave Miami and work free at our shop because he has never seen a time when there is more money to be made the old fashioned way...picking off the sissies.
And then there is an unfortunate situation that someone I am close to experienced yesterday. She is selling a prime piece of property near the ocean in Maine and was in the final offer / counter-offer phase with a cash buyer and all looked good. The buyer pulled out at the last minute for reasons I paraphrase below:
I am concerned with the stock market making new lows that this is not a regular recession and we are in fact headed toward a depression. The only safe place to be right now is in cash.
Okay, everybody’s got the memo; deflationary depression it is. Well not everybody… I’ll go with the old pro’s and stick to my story that there will be recovery – borne of inflation – and there will be places to invest and places to avoid. With the entire world now expert on deflation and 1930’s history, I have got to believe we have a huge counterparty of ‘sissies’ waiting to take the other side of the trade.
I personally believe any coming stock market rebound is a trade only and things could get worse before they get better. But if I were a deflationist I would be uncomfortable with the level the major media and by extension, the public are up to speed on the concept just as I was uncomfortable with every Tom, Dick and Harry on board the inflation express.
