I guess I'm going to tell a story. In august I was busy... You know.... all that stuff one is busy with... and just moving some investments around..... I was suspicious, so suspicious I invested in some gold even.... Well that first leg down took gold with it...... I was a little ahead of the market... Well gold did rally back..... and that august leg down, I spent about every hour of my time doing research..... and research about stagflation, and bear markets and how they trade......
I knew that As the fed starts cutting rates we have a denial rally to new highs..... We got that in October. Then we start to decline... Usually that decline... in a Real bear will decline between 20-40%.... that total decline it will take half of it in the first part of the year, then the second in the second half of the year ... with a rally in between.
That follows Standard EWT Wave A down... Wave B Up then C down
Here is the decline since October... What this suggests though... is that we still need a wave B... followed by a wave C Delcine..... My point is Even if we Rally.... Don't trust it... maybe between now and Tuesday... we will bounce... but event then... I wouldn't trust it for longer than a couple weeks. That is scary.
This is the 2 years of the 73-73.... That first Delcine is a 20% decline, then as you notice we muddle... and in 73-74 we muddled for 6 months... IMO we are more at the end of that last red line.... For all the "Bear" markets I looked at... admitidly I didn't go back beyond this century... We declined a total of 20-40% over the first Period... but in 2 very separate Sections with a solid Muddle in between..... I don't believe that the muddle we have had between Jan and may was enough, that was only 3 months.... it is too small a muddle. We want a solid Range bound Muddle... and then a ridiculous decline that will make everyone want to shoot themselves... But with Oil shooting to Ridiculous highs, that make these highs seem silly. this took 2 years.
Then we just spend 5 years range bound between say 10k and 12k.
The same thing causes this every time... Santelli was talking about this... Someone comes up and asks you for $100, you say no way, give them $100 and they are excited... The fed is stupid, just as emotional as everyone else, after 30 years of "Free Money", because the fed won't to the hard thing and Take the money away. They have done it just like Children do with finance, where they run up credit Until they cant pay it back. That is what the fed has done. Over all for quite some time they are going to whistle past the grave yard on it, Take no responsibility(go back to my thesis on them being children).
They will, as time allows start raising rates, and instead of trying to break the back of inflation, like good Austrian economists, they will approach it like Dim-whit What ever type of economists they are.
I think over the next 3 months to year the stress is going to get to uncle ben, you can tell he has a nervous condition, and academics are not "men of Action" or they would .. do something, as the congress Beats the shit out of him. They could quite honestly look to Fed Fisher to bail us out... they don't know anything, all they know is what they are doing now Isn't working... and will look to someone else and scape goat Uncle ben.
Of course then when fisher smartly doesn't want to give out the free lollypops in 10 years, they will dump Fisher, and find some easy money guy to replace him... and the cycle will start again.
Overall... ya....... I'm just saying be Cautous.... Things are never the same... Some say things are never different.... I'd say, things are never the same, but very simaler.... The interesting thing is how things will be different. I can't believe the fed isn't being more cautious, and if when the ECB meets and oil is at 150, I wouldn't doubt if Trichet is going to call Uncle Ben's bluff...
I hope oil moderates What I can't believe is how bullish it acts... it hasn't shown any weakness since 115, that is a 30% gain... On nothing...
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