Thursday Jan 19, 2012
Please read this colum by Peter Brimelow and watch the embedded video.
The video is of a mass of starling birds over a river in Ireland. The group of birds exhibits the same thing seen in schools of fish in an aquariam, the entire group appears to turn at once for no particular reason. Is the group turnng of its own volition or are they following a lead bird or fish?
Yes this is important. We write abou socionomics, the idea that a change in social mood changes behavior whcih influences what is bought, sold, is acquired or cast away. Brimelow describes James Dines comments about revolts around the world, and there are plenty.
Even Governor Perry of Texas made a comment about secession, which of course was widely derided. Yet the sentiment is ripe for just such a movement. The violence in Northerm Mexico is truly awful. Mexicans still believe the US stole Texas, New Mexico, and some of AZ in 1848. THe gradparents of those of us in our 60s knew relatives that fought in the US Civil War. So US revolution is not as distant as yo might think. Bumper stickers proclaiming SECEDE adorn many a large pickup in this area. Will the Keystone XL rejection spark resentment?
At any rate, it is am apt metaphor and we will disucss it more this weekend.
At this point the rally is clearly getting underway. The bond market has yet to really break down. The Dollar may have peaked this last weak on the news of the Euro downgrades as I noted yesteday.
THe Bond Market Exhibits Head and Shoulders Top
One of our themes has been that safe harbor money has refused to leave the ultra low yielding bond market for the stock market. And we have contended that when it happens a flood of money will cascade into stocks. I have labelled a head and shoulders top for TLT. Note that the money is leaving the party in the bottom panel. This is a classic set up for a collapse. Now TLT needs a significant close below its 34 day EMA of 119.
The Dollar
While the exact head and shoulders pattern is not as clear for the Dollar, the Chakin Money Flow indicator at bottom is. The US Dollar likely topped a few days ago on the news of hte Euro downgrade last Friday. If this analy sis is correct we should see exactly the opposite thing happening in the Euro. We an use the FXE whic is exchange traded to take alook. By the way, note that UUP only made a slightly higher high than in October. Given the manic headlines, There is no Future for Europe, Merkel and Sarkozy are Toast, etc. one would have expected much higher highs, but it never happened.
Euro Trust
Sure enough the money flow for hte FXE is the exact opposite of UUP.
So, money is about to leave the US govt bond market and the US Dollar. It will find a home in
commodity related producers and commodities in the US.
WYNN jumped 4% yesterday. This lead casino is a great indicator of invetor sentiment.
RIG, one of our two contrarain picks, jumped 4% yesterday.
URA uranium jumped 5.21% yesterday.
XES Energy Services jumped 3.6% yesterday. My self directed University Retirement fund has it larges exposure in energy services. Oddly no one responded to my idea of posting my picks among Fidelity Funds. Oh well.
We are transitioning to an emotional move to stocks from bonds. Scan our headlines on the blog the last few days, we have been predicting this.
thanks for reading TMP we hope TMP has improved your investing.
