Go Along to Get Along…

I have been shamed as part of a select and limited group of conspiracy theorists who believe that the markets have been and are now “manipulated”. It has given me the confidence to be long some more speculative areas of the market but I’ve mostly kept to stocks that can fundamentally “hold their own” in any environment.

Now, officially, even Mainstream Wall Street Strategists postulate the import of the Central Bank stimulus in the market’s current price and that future price appreciation depends on more stimulus. What is most amazing to any student of market history is how perfectly effective the closed loop, free money stimulus has been.

What is even more important than funding the market’s boomlet is the ability to create the source of government deficit spending. If the government is truly the “Last Marketmaker”, then its needs are paramount.

We are warned that it will all end in disaster and tears. When? Best Guess: Any day now…Or perhaps just after April 15th.

To expound on Senor Fly’s point today, to chase gains is stupid. But if you said that in December of 1999, you may have well set yourself on fire in front of Maria Bartimoro.

Then, just like now, “investors” and traders are forced to set aside their better judgement or their outright disbelief and just buy.

Back then everyone KNEW that the party was not sustainable and downright cartoonish. Today almost everyone KNOWS that the party exists on the kindness of Free Central Bank money. Without it and the DOW drops to 10k as fast as you can say “Jack Armstrong”.

But with the free money, everyone and everything  is ok, even if it isn’t, at least until April 15.

It seems that most market participants know the Construct from which current markets operate. It’s all done with a wink and a nod.

Forget about the Propaganda or news. Just know that an over-leveraged and over-indebted economy cannot be fixed with more leverage and debt. Yet that is precisely what the answer to our problems has become. Simply buy up the old debt with freshly created money and issue new debt.

It seems that nobody gets hurt and everyone wins. The equity and commodity markets seem to think so.

And why not? Trillions of newly created dollars were/are being pumped into a closed loop system, with the cash never to see the light of day. Inflation? It only comes from fresh money chasing hard assets and prices do not reflect the supply and demand dynamic. But its OK because the money has to go somewhere.

Today, Texas Fed-head Fisher talks about the endless drug of stimulus and how it effects the marketplace. The speech was picked up by Zero Hedge and the introduction plainly states the obvious: that markets simply have a Pavlovian Response to the Fed’s stimulative actions. Where have I heard that before? PAVLOV1 PAVLOV2 PAVLOV3

It is always nice to see our ideas being put forward by others far more important to the investing scene than us.

How does this phase end? April 15th

A concept that is now coming into wide acceptance is that the financial world is filled with legalized fraud. It is widespread and acknowledged from the top down. But it is all done for the “greater good”.

Anything remotely resembling “Normal” has been put aside for another day and another time. No matter what numbers you come up with or what you “know” is meaningless in this phase of our financial world.

Any economic downside has been and will continue to be met with “unconventional support”, ie. counterfeiting, better known as money printing. There will be no failure. There will be no defaults that create a “CDS event”. There will be no criminal prosecutions for banking fraud of any kind.

Central Banks and our Chairman has become the market and whatever investors are left will buy exactly when we’re told to do so. This is the reality of Dow 13k and Nasdaq 3000.

This phase of the market will play out EXACTLY as it has over the past two years, or until QE is made permanent. I know this sounds jaded but it is reality. The music must pause at some point and latecomers will be buried, again. But then the hope and planning for the next round of “intervention” will be anticipated and investors bailed out once again. So enjoy the great levitated market until the April 15th deadline of getting your 401k/IRA money in and tread carefully!

You can check in but never check out:

AAPL
GOOG
AMZN
BIDU
PCLN
LVS

and remember, tomorrow happens once every four years…

So, almost every stock and commodity was lower on this bright Monday morning. But as par for the course, at 9:40am on the dot, buy programs began to run and within an hour (a long time nowadays) markets turned positive.

And so, again, all bad news is known and discounted, including skyrocketing gas and commodity prices. All selling dried up within a few minutes to be replaced with outright index buying and screens went from red to green, just like that.

You didn’t expect the tone and tenor of the market to change today, with just three days until the end of the month, did you? I didn’t think so….

You continue to be trained that Central Banks are bigger than any market because they now are. You are also being trained to never sell or stop because it always comes back. Over and over again the markets refuse to allow any selling so you simply view any selling as time to take a few minutes off or a time to buy the dip, even if it is just a few points. Of course your training will eventually betray you when you ignore the eventual real selling, but I digress.

This training is a carbon copy repeat of last year and the year before during this first quarter of the year. In each of those previous two years the markets moved higher in an uninterrupted fashion without so much as a 1% pullback, just like this year. The similarities are twofold, first the perception (however shortlived and illusory) of a recovering economy and massive money printing from Central Banks. Over the past two years there was a specific end to the domestic QE but it seems that the Euro-printingfest may be open-ended.

So let me go out on a limb and say like the past two years, the markets will levitate just long enough for you to allocate your 401k/IRA into the stock market. By that time, the DOW will be closer to 14k than 13k. And because after all, the odd-lotter (you, of course) must buy at the top of a multi-year range and become a “long-term investor”. It just wouldn’t be American if it were any other way!