Monday Dec 30 2013
Henry Blodgett explains that a Crash does not require a Catalyst.
He correctly concludes that the only thing necessary is a change in the mood of investors.
A few more reasons for concern.
Bob Prechter was a guest on Cavuto's show today. He predicted the markets were within 3% of an eventual top. He cited the surveys showing the same bullish optimsim as in 2000 and 2007. He went on to note that one group of managers was 104% invested meaning all their managed funds were in the market plus some borrowing. That he maintained would set the stage for a move under 6600 in the next two years. Charles was hosting today and noted there were plenty of bears on Fox Business News. The other view of course I presented from a Chase Economist and Joe Lieberman, what's not to like? We are only half way there on the upside.
As always, John Hussman is an interesting read. Thanks to the reader forwarding this link!
If materials and shipping are picking up, does that mean gold and silver will follow? The answer is no.
Copper Relative to Gold
The ratio chart shows copper wildly outperforming gold. Money is coming out of the gold market and into stocks and materials on the idea of an improved economy.
Copper versus Gold
Gold is a fearful commodity. The ads on cable tv and radio say it all,the governments of the world are printing money and this will all end in catastrophe, buy gold now. But gold just sits there and looks at you as Buffet observed. Copper on the other hand is useful for making wire nad circuit boards. Here copper is breaking out over $3. The two separated in September. Money is coming out of the gold market, period.
My read of the internals in an ordinary market would have proved valuable this past year. But with the FED injecting money here and there, traditional analysis just does not work. The number of net new highs may be dropping but the index will climb if enough money is injected into the system. So Bernanke did not create a lot of jobs just a lot of inflated stock prices.
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