"As a technician, I feel that there are few analysts that offer value for me, but you do. Your work on Gold ratios has helped my analysis greatly." --Jordan Roy-Byrne, CMT (The Daily Gold) 4.9.10

Wednesday, January 11, 2012

Russell Rally...

It's the Richard "Be out of ALL stocks including mining stocks if you've not done so already" rally.   The Russell 2000, upon hearing its namesake's instructions on December 12th promptly broke upward along with the broad rally we have to this day.  

It's the silly season with indicators like the sleepy VIX and the over bullish state of the AAII dumb money investors mucking up a short term (post Russell Rally) that is at odds with a growing list of things arguing that the herd is going to get caught way off sides at some point this year.

The herd is apparently cowering in a corner sucking its thumb reading about the Great Depression again.  Unlike with the 2008 disaster, it feels like the herd has been managed there this time.  Ever since Bill Gross shorted the long bond at the lows (yield highs) forming a counter party of  T bond sellers for contrarian buyers the news has been all T bond positive and now we reside at the opposite end of the spectrum, with calls for getting out of all stocks, MF Global margin account hysteria and DEflation.

It's the old patience and perspective thing.  I know that is boring, but smart players are keeping both on the front burner.  There will be near term market issues, but the big picture is where the money is made (or saved).  Watch the long bond... watch Uncle Buck... watch the euro... watch gold... watch silver... and watch those assumptions and 'follow the guru' impulses.

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3 comments:

  1. Richard Russell quote as of Jan 9, 2012: "Please be out of all common stocks with the exception of the mining shares." You misrepresented his position in your post.

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  3. No, sorry I did not. http://www.321gold.com/editorials/russell/russell121311.html

    Anything he retracted since then is not relevant to the conversation. I do not have time to be researching all of Russell's flip flops.

    It is in my opinion the height of arrogance to presume to tell people what to do as if one knows what will definitively happen in the future.

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