Click on the chart to enlarge.
I’ve been watching this bear channel for a while now. I see no reason why the upper channel line will not be challenged, and I’m not really sure what could stop the market from trading above this long-term demarcation of the downtrend. It seems most everyone except for our President believes the market has detached from fundamentals, but no one seems willing to hazard a guess at when the music might stop playing.
A tangential thought: After the market rocketing 50% since his “its a good time to buy stocks” speech, does anyone think Obama might mention now would be a good time to take a little off the table?
As shown in the chart volume on the [[SPY]] is low and has been decreasing with every up day, but volume on the $SPX seems more normal, relatively speaking. I’m not sure that the low volume on the SPY is a smoking gun, as some bloggers have opined.
While there is still a very large contingent of traders who believe the markets are setting the bulls up for a swift and agonizing cliff-dive, the more I think about it, the more I doubt that any of the large trading and brokerage firms are setting everyone up for a fall. Rather, I think they have realized that if the markets do not keep going up, for a very long time, they will likely suffer a rather nasty fate, which may or may not include torches and pitch forks.
I do believe that this six-month rally has been driven primarily a small group of players (the last of the Too Big to Fails) with large (publicly funded) pocketbooks. They have a win-win situation, if they can keep the markets up: They get large bonuses, and the American people get to watch as their 401K and retirement dreams rise from a sarcophagus, not unlike Lazarus. The alternative could mean a very real paradigm shift, which could challenge the future of the banking establishment as well as the current power structure in Washington. The current paradigm will not just give up overnight. Anyone who has watched a strong person go through the process of dying knows how long the spirit can survive, before finally succumbing.
I’m still a non-believer, meaning I’m expecting a pullback which I believe will frighten many of the currently invested public to the core. However, my beliefs don’t really mean much, as I just do what the systems tell me to do. As I listen closely, I’m hearing that it might be time to dust off a breakout system or two.
Still, sometimes the systems tell me to do things I don’t want to do, like get 25% short the SPY.
“Rather, I think they have realized that if the markets do not keep going up, for a very long time, that they will likely suffer a rather nasty fate which may or may not include torches and pitch forks.”
Bingo.
But how long is very long?
I think longer than the rational man can believe.
I agree Boom. Could be a while. But the fact that we all think it could be a while, maybe means that it won’t? 😉
Woodshedder,
This is one the best posts I’ve read in a while. I’ll toss my two cents on the above. cheers.
Awesome Post. So True.
Thanks guys, glad you enjoyed it.
Excellent post wood, i think you managed to expose the conspiracy theory while sounding perfectly normal and balanced! That is no easy trick. sound premises, sound logic. good job.
dv
Thanks DV, it helps when I use thick, expensive tin foil, with the ridges aligned with the meridians.
…with the ridges aligned with the meridians.
That was supposed to be a secret. You are in soooo much trouble.
There is not a day that goes by I don’t think about that awkward comment Obama gave about buying stocks. Who would have thought the president would flat out say “buy stocks” then they rocket. I did not hear his speech today but if the tough wall street talk starts amping up, that might be the tell this time. This rally will fall flat without the government cheese supporting it. We would probably see Dow 6000 in a few weeks! Anyone remember Cramer making fun of Obama that day in Sad money?
looks like that gap from 08′ lines up nicely with the upper channel line. Interesting..
Obama sounded like a scared little girl in his speech. Wall Street scoffs at his attempts to reform it.