So, we were greeted on Tax Day with a market mess. Surely it couldn’t be so obvious that the day the last bit of your retirement money gets put to work, the market would tank. The reason? S&P; you know them. They downgrade stocks at the bottom and upgrade them at the top. They put their AAA stamp of approval on what are probably fraudulent CDOs and other derivative instruments. Nevertheless, they downgraded the “outlook” of the debt of the United States. Shocking! Sacrilege!
But the markets, in their infinite wisdom, chose to ignore the big volume selling and race back, on low volume, in just a few hours. Just like it has after every sell-off during the past two years. Except for the selling that occurred during the space between QEI & QEII or course.
In my Tuesday morning video show, I stated that the market is going to test its highs next. I said it without equivocation. But I didn’t expect it to happen in one trading day!
Today the market began with a mirror image of Monday morning. Almost every stock gapped up and lifted 3, 4, 5%+ on no news and little volume. The reason? The Dollar Index (DXY) lost 1.8% since Monday, so everything priced in dollars is worth more. It has been the causality for over two years and it is as strong as ever. BTW–it won’t work on the way up as well as it works on the way down. The bottom line is that investors around the world are programmed to buy anything and everything as the dollar falls. Is it good for America? Who cares? Certainly investors don’t.
So today the market is racing up huge. Monday’s 90% down day is negated and replaced with a 90% up day. As long as the markets are running, nobody cares about the budget or deficits or politics. Precious metals are reaching new highs. The world is awash in oil and there is nowhere to put it, yet oil nonetheless continues higher. Financial companies like banks continue to disappoint yet markets don’t care. I could go on and on, but we all know what is happening and it doesn’t matter to the market, until it does.
After today’s action, many cautious Money Managers will give up. Any doubts about anything are being forced out and any money will be put to work. The clear conclusion is that with everything happening, there is nothing that can hurt the market. Sure QEII ends soon but it is not stopping the gains. That is the perception.
Some see the technical picture as a reverse head and shoulders pattern, indicating more upside. Others see a double top. I see a double top but my guess is that we are on our way towards making a marginal new high. It will look like a breakout but it will fail, reverse and take us back to test SPX 1300. Then lather, rinse and repeat for now. The Chinese may be tightening, but not us. While the world is awash in liquidity, almost nothing else matters.
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Nevertheless, they downgraded the debt of the United States
Technically they didn’t. The “lowered the outlook”, but the rating remained the same.
Correct and corrected!
So todays massive miss to the downside in inventories for oil mean the world is awash in oil? With Nigerian violence picking up and a potential civil war in the Sudan?
Inventory miss? Refinery nonsense. Nigerian violance? Happens daily. Sudan? your kidding me, right?
Supply and demand has had little to do with oil prices since GW went and kissed Abdullah on the lips and held his hand. Now they are mad at us because we didn’t stand by their dictator of choice.
Talk the our trader and ETF friends and ask what they need to buy to satisfy the 401k money allocated to oil.
Main obstacle for bears here is Oil.Looks ready to dip towards 90$ very soon –sending XLY discretionary and XRT retail even higher.
Check out charts of the dry shippers (BALT DSX DRYS). They prove for a fact that MOST of these ramped up commodities aren’t actually being shipped. That puts into question these rallies in ag DBA and USO oil.
How many commodities are shipped these days? That’s what pipelines are for… what’s your read on those?
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The vast majority of soft commodities are transported via cargo ship
http://chart.ly/wuasi87 Huge divergence between food prices, and actual shipping of food,proves speculators are cause of crisis
Jim Rogers is like a combination of clown, terrorist, and james bond villain. This Food crisis is all smoke and mirrors.
There ain’t no pipeline running from Saudi Arabia to Houston.
My only complaint here is the Yiddish. I am not a Tribesman, but pride myself on my grasp of at least a 200 word Yiddish vocubulary, via my growing up in Lawn Guyland.
I am almost positive it is “Meshugganah,” but then, that’s from memory.
Meaning “crazy like a loon.”
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