the trend is up, market has bottomed.

Actually, I was agreeing with your statements about Clinton being the main culprit for alot of our current illnesses...But I also happen to agree about the SPX as well...I just do not trade from a "macro" perspective, so I do not pay too much attention to the weekly time frame...That being said, I also trade with a great deal of awareness about how the mechanics of the bear market are drastically different from the bull, (seems like an obvious statement), but I am talking about the nature of breakouts, retracements, entries and exits...If you notice the daily charts on the SPX, almost all of the breakouts lower thru longer term line resistance(downtrend lower resistance), it almost always is retraced within a few trading sessions...Hence, as many other people have noted, each break lower is covered and then sold again on the retrace or reflex rallies higher...Conventional wisdom tells people to sell breaks lower, buy breaks and retraces higher...Now, everything works in reverse...To get solid low risk entries, you are forced to pick "relative" tops, and cover into "relative" lows...To get long side low risk entries, you are forced to pick "relative" bottoms and sell into "relative" tops...In the bull market, everyone just lined up on the retraces and supported the markets...Now, these stealth bear spikes bust through layers of different time frames and classes of speculators...Perfect example was last Tuesday following the ORCL news...Both ND and SP broke weekly support(downtrend) at 1040(ES) and 1160(NQ)...But the second that broke, it was retraced...Truly perverse...Markets just tanked following that event...Almost every rally off the lows since this last leg started in mid-March has displayed similar characteristics...Sharp movement higher on the back of what seems like good volume, good committment, only to be sold to lower lows within a few trading sessions...In fact, this seems to be the only way to garner any liquidity because the conventional wisdom tells the majority to simply buy the retraces following a move like this for a re-test of swing highs...In almost every case, those retrace buyers just prove to be bait for the bears...
 
Well said....certainly jives with my experiences...'perverse' is a word I've used often to descibe the machinations of this market -- one word among many.
 
Originally posted by Babak


I just read this: http://www.zealllc.com/2002/realgold2.htm and it really scared me. I heard Jim Rogers on CNBC last week talking along very similar lines.
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Indeed, the goldbugs have a very powerful argument these days, and are starting to gain attention again.

However I would be wary of betting big on gold for two reasons, both of them having to do with the powers that be.

1) Central banks are still sitting on a massive stash of yellow, more than enough to swamp the market for a sustained period of time. The announcement of a five year central bank sales cap caused gold to spike dramatically in mid 99. A similar announcement on the flipside, i.e. a program of sharply accelerated central bank sales, could shave $100 an ounce off the yellow just as fast.

2) The US government still has a few emergency aces up its sleeve, and team Bush is not stupid no matter what Democrats would have us believe. Just imagine if they were able to ram through a three percent privatization of Social Security, or a drastic reduction in the capital gains tax.


This is why the crystal ball is so hazy. The writing is on the wall, but with the power of Uncle Sam on their side you can never write off the bulls completely. Which means we gots to stay short term and keep grindin' it out imho. Same play, different day.
 
darkhorse,

what stood out most from that Zeal article was how the US is manipulating the CPI numbers. I don't think anyone can argue that you can increase money supply the way Greenspan has and at the same time have a tame inflation outlook. They have to be pressuring the CPI numbers down. They can only do so for so long before smart investors and bond holders catch on to this. I don't think I would be too happy if my US $ holdings were being eroded quietly on the low down to protect the strong dollar policy and the bull stance on Wall Street.

If this indeed is what is happening, foreign investors would punish the US in the most brutal and swiftest manner we have yet to witness. They will flee from US denominated assets to real assets (commodities: gold) and to safer places like Japan (the opposite of inflation) and the Swiss Franc (the only rock solid central bank after the utimely death of the Bundesbank).

Also caught this article on SI :

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=17641184
 
lol...this stuff has been going on since the tail end of the Clinton years...How many times in 1999-2000, did some guy with the BLS "accidentally" release reports a day before they were supposed to be released...I mean, once was enough, but this same supposed "stooge" kept doing it...

But my all time favorite was how all the CPI numbers were revised about 6 months post-release...It was just a "sidenote" to any news broadcast or any article in any of the financial publications...The simple fact that all numbers CAN be revised and actually ARE revised consistently is proof that all of these numbers are merely guestimates that bear little resemblance to any reality...

Heck, if inflation were reported properly and included a "core" set of real world components, they would then have to increase the payout to Social Security recipients and therefore have a bigger deficit in that "trust" fund...
 
vulture,

exactly! But in the Clinton era we did not have negative real rates as we do now (well according to Greenspan and BLS we are hovering at the zero mark).

Here is the graph:

ZealG283.gif


Real rates are in blue and red. Blue above zero, red below.
 
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