12 OBSERVATIONS AS WE APPROACH THE FINAL TRADING DAY OF 2011
It has become a typical practice of the market to act like it wants to love you and then drive a pitchfork through the back of your head while playing loud heavy metal music, as it kicks small dogs.
In fact, today feels a lot like December 8th/9th. I was short then too. Interestingly enough, both incidences were off the 200 day and the same trajectory point. The market is using the same playbook during the same points in the game week after week. If it sticks to the script, tomorrow should be a move down that closes below 1250.
I changed nothing within the portfolio today. Basically break even for the week more or less.
Some quick observations that I will elaborate on this weekend:
- Gold has not put in a bottom of the short, intermediate or long-term variety as of yet
- Silver has not put in a bottom of the short, intermediate or long-term variety as of yet
- The Euro has more downside ahead
- The fact that bonds continue to consolidate along their highs is perplexing. I'm not sure which way this will end up breaking. And I'm not sure of what the bond market is telling us at this point.
- The TED Spread and its insistence on carving out a new high day after day has past the point of being able to be ignored. Something is cooking.
- The next leg of the crisis seems like it is going to involve the emerging economies, namely China and India. The weakness in commodities seems to be screaming this.
- There are far too many bulls out there currently. By all measures bullish sentiment has reached levels exceeding any point since the first half of the year.
- Significant tops occur with expanding ranges, increased volatility and wild action. Sound familiar?
- The market seems to be conditioning short sellers to take profits on the first dip. Those who are able to withstand this mental conditioning will make the most during the next downleg. It takes courage to be a pig.
- On the other hand, the market seems to be conditioning longs to buy into multi-day dips. The combination of short sellers chasing the downside and longs having to sell out when the market keeps dropping is what will cause the ferocity of the next downleg.
- I can't believe that such a great country as the US has such a lack of leadership when it comes to candidates for the Presidency. It has become a job that nobody good wants, as the risk versus reward given where we are in the grand scheme of things just doesn't add up. All the smart guys that could actually make a difference are busy making a difference in a much easier setting. Perhaps they are smart enough to realize that the system has been broke to a point where regardless of how smart or influential they are, they will be stonewalled at some point and the status quo will continue.
- I am elated that tomorrow is the final day of 2011. I hope I am not saying the same thing this time next year.
