Timing Market Turns 11/17/2005
An objective view of today: It was up across the indexes.
24 Dow stocks up
432 S&P 500 stocks up
It would seem a bullish day. November is a very bullish month. Most broad indexes are at or above resistance of recent highs. Getting above those levels this month has important implications for next year. December is often a laconic time with occasional steep drops followed by year-end rallies.
Getting above this year's highs should ignite a sharp and relentless move into month's end.
However, the other side has a few items in its favour. Sentiment is Whoop! Whoop! BULLISH!. We might see a slashing pullback beginning tomorrow to flush out the weak handed young steers!
)
How about this scene - new highs between now and Monday, then drop like a rock into Wednesday! Option trader professionals have all but left the pit and are headed to the squash courts. Distribution is nearly complete, imo.
A word about crude- I thought I had mentioned crude going to $56-57 as a downward level. I could not find it in previous posts, but i didn't look closely. Nonetheless, it is there and due for a bounce. A potential low level, though not necessary, is $49. Either a sideways action will be sufficient to end the correction.
The next move higher will surprise the media and most Americans. $92 oil and $4 gasoline is inevitable, imvhmo.
The economy can handle it but the economic growth we have seen in the US is about ready for a breather, as they say. A year or so of slower paced growth will be a healthy thing. Again flushing weak hands and businesses with no reason for being out of the system.
The economy's roommate is the government, both state and federal. Sometimes I wonder why Hollywood doesn't make a sitcom based on the various governments and agencies. Then I see the news and realize that the "events of the day" are funnier than their best writers could imagine.
The only people around government dumber than politicians and government employees is the media that covers them. Well, I guess the people who believe the media without question might be dumber.
Somehow the government has managed to let business get along despite the overburdening the little guy with paperwork and regulations. Not all regulations are bad. There's just too many of them. That is to say, it is hard to imagine the kind of growth and prosperity the US as a nation would be experiencing if there was less government and more commerce.
In context, historically low unemployment, nearly 8 million jobs created since 9/11, productivity at sustained levels that were predicted by only one or two economists. Federal revenues so strong they can't even estimate the deficit (although it is a mite larger than it could be).
So why is the current administration at such low numbers in the polls? CIA leak? No. North Korea? No. China and wal-mart? No. Iraq? No. Peace marches? No. So what is it? How can this be?
It's those dumb people were allowed to band together and dominate "the conversation". The politicians against this administration's policies, the media which is always ready with a canister of kerosene to keep the flames rising, and the dumb public consumers of news. All of them did a great job. What did that general in New Orleans say to the press? "Stuck on stupid"?
This event happens so often it defies reason. The vicious media cycle is only broken by strong truth telling. That is what has begun with Bush and Cheney and others pointing out that these little Emperors are in fact naked.
WHY Have I written this monologue without reference to markets? Because it is the exact same human behavior I study and measure in the markets with price and volume. When everybody believes that they are totally correct, they will certainly be crushed by the weight of their assumptions.
The facts are too brutal to say to someone's face when they express an opinion about economics, politics, opinion polls, markets. Why? Because they typically sound like they are repeating the six o'clock news. NOBODY WANTS TO DO THEIR OWN CRITICAL THINKING AND INVESTIGATIONS.
My advice is to never argue with those people who still believe that a bear market is just around the corner. Just nod your head and throw out an occasional country style "heard that!" kind of response. It encourages them and they will be sure you agree with them. Then you will have found a gold mine of mostly wrong information about the market. You can then do the exact opposite blindly and have a very high percentage game to play. Blindly may be a mite overstated!
Having seen my fair share of bull markets and bear markets, I have no apprehension about being bearish or bullish. It is just a plain fact that since the October 2002 lows we have been going upward and I don't expect it to stop for a very very long time. By the time this bull market is over, I'll be dead and dust, forgotten by the next generation, who will have convinced themselves that they are responsible for the gaudy opulence in which they thrive.
But some day someone will pull out an old battered chart(probably across two pieces of paper) stretching from the ancient 1932 low forward to their day. They will look and perhaps they will also marvel at what the great women and men throughout the history of this country have wrought. The perpetual bull market lasting well over 100 years!
Human behavior always tells the story of the culture, reflected in numbers of the culture's subsets: markets, economies and elections. These are the watermarks of liberty.
I am grateful to be alive in these beautiful times.
Good trading and God bless.
W. B. Busin
