Thanks sddude for giving me credit for calling this bull market. It is amazing all of the heat I took for telling people I was looking for a rally at the end of this year. The lesson to be learned from this has been commented on by colombo, the effect interest rates have on stock prices.
This big rally that we have had in bonds has been so powerful, that it even kick started the mid-term election rally earlier than it normally starts. Divergences between bonds and stocks have occurred at most major high and low we have had in the stock market, just look at some charts.
I mentioned in my blog at the time, and in here, that bonds were breaking their downtrend when the price was at 10814 and now we are at 11100. I have also warned many people in here about the GOLD market as well. This has always looked to me like a speculative top, accompanied with all the standard media BS that goes along with such events. Oil is a bit different, but again I made many comments about this as well. The trends in these markets are both heavily down at this point. RSeiser can back me on this as well. When we had lunch up here, I told him I was looking for a downside break in GOLD, this was a few weeks ago. He at the time I recall was looking for an upside breakout.
I mentioned repeatedly the importance of 574.50 which just broke. The last line in the sand is probably somewhere in the 520’s which is where moving averages come in on monthly charts. The biggest problem GOLD has is an overly bullish sentiment, which is bearish.
I am no economist, and my opinion about long term macro economic cycles is no better than anyone else’s in here. However, I think we have seen enough examples of economists being the wrong people to listen to about timing investment decisions. These people are very smart, but not necessarily correct.
I also do not share the dire economic view alot of people have in here. I do not think a severe recession/depression is coming. It may happen, but it has not yet. You can always exit on short notice in stocks if this start to look bad. I do think mid next year, say between my-June and the fall we will have a sharp drop in stocks due to cycles.
Also, the one thing that concerns me about this rally in stocks is the prominent divergence between the S&P 500 and the DOW. This rally is very narrow, which makes me think a sharp pullback could occur. I am hoping or that to load the boat on the longside. With bonds being this strong, I think this pullback, if it happens will be short in nature.
Some of my friends in the trading world are perplexed at how far this rally has gone, with some of the internal weaknesses at hand. I also am surprised, and have not gotten nearly the profit out of this that I should have because it occured in advance of my model by a couple of months.
