Welcome to the new reality articulated perfectly by Senior Tropicana. An up day keeps Bernanke at bay. But this market is clearly Zombyized. Clearly one trading desk sells to another all day until the end of time. It is the ultimate pyramid scheme.
We all know that the market is in no way reflecting the reality of the economy. Government statistics are bogus and have been for years. No conspiracy there. The current situation is better than at this time last year, but last year was zero, a big goose egg.
You’ve heard the statistics: there has been no 1% correction in 8 weeks. 21 of 24 Monday’s are positive. The string of up days is historic in most major indices. And Apple rises 1.5% a day, every day.
Volume in the market is punk. The grind higher is done on ridiculously low volume and every pullback is of high volume. But then the volume just dries up and markets bounce again, and continue their low-volume grind. I’ll tell you what; when volume comes in on the upside, I will be very suspect.
Ever wonder why the market rises constantly? Because the FED has dropped an average of $24B in the lap of Wall Street every week for the past 52 through the buying of toxic Mortgage Backed Securities. $24B, leveraged at least 10:1 or $240B. Does that sound like $12T? Yup. $6B for stocks and $6B for commodities and corporate bonds. Don’t worry about Treasuries, there is another entire $750m program to buy them.
Are you getting the picture? Can you see how this has come about? Keep buying until you’ve bought confidence and the public comes in. And guess what. Most have fought it and still fight it, but there is plenty of new, fresh, crisp money coming from your savings accounts and going into your 401k’s and IRA’s. It is getting plowed directly into the market before you change your mind and ask for it back. But once it’s in your tax deferred account, there it will stay–unless there is an emergency and you need the money. But then the gov. gets a biggg cut.
The MBS buying program is supposed to end tomorrow, just as you are allocating your capital into your retirment account at quarter’s end. Will you provide the Wall Street complex with enough firepower to keep gunning the markets? I highly doubt it unless you pull all your money out of Pimco. But Bill Gross might have a heart attack on the air. Nobody wants that.
Can this go on further. Sure, but there are laggards to be bought and overexteded stocks to be shorted. To say this advance is long in the tooth is an understatement. If there is any real or extended market weakness, the FED will buy more MBS’s. But the hand-off from $24B a week to Zero should be a very interesting time in the market for all.
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great insight scott, thanks. keep up the great work.
Scott,
Where can you find the spending habits of the FED on a weekly basis for the MBS buying program? Would be a nice data point to follow.
http://www.newyorkfed.org/markets/mbs/
You can start here…
Only the tape tells the truth and right now it’s done nothing wrong – the leaders are still holding in there. Today was just another in a long line of consolidation days.
Staying with it till it tells me to get the fuck out. Is the trend going to change in Apr, one of the best months historically? I have no idea but I’m going to wait and find out.
TA–you sound exactly like EVERONE that said the same thing leading up to the January correction: “I will stay long unti the uptrend breaks” and “the market is innocent until proven guilty”.
With G*ds gift to Wall Street ratcheting down, in the way of MBS buying, where is the cash?
I would hate for my subscribers to wake up one morining and many stocks down 10% quickly, or worse. We both know that when a correction does finally settle in, the average stock will do much worse than the overall market.
I still have quite a few longs. Most are laggards and dividend payers. But I am looking to enter at least 7 shorts and maybe more to come.
I try to eliminate the noise and listen to what the market is telling me.
We could go down big tomorrow, Apr 1st or next week – that risk never goes away.
The leaders paused today, if they pause tomorrow that will be the signal to raise more cash.
I should also note that I’m quite hedged – covered calls on the long term account, short puts on the trading account
I probably react more than I should to pullbacks
and BTW, I DO find your comments to be valuable!
Great commentary. Glad you are on iBC
Your best post yet.
I love the well reasoned cautionary tale. When the commentary is all positive it will be time to get out. That said, I am getting out of some front runners. I sold LIFE today, all of it. Buying VOD. The last thing the Euros will give up is their cell phones, and something is gonna happen soon with Verizon Wireless.
Loved the post Scott. I sure hope your right. I have a fas put spread on that is killing me.
Not that safest trade i know.
Scott,
I think you should follow Daniel Estulin. He predicted this market one year ago, and he’s not a trader. He’s an investigative journalist who, due to his family ties to the former KGB, is trusted by quite a few globalist insiders who share very high-level news leaks with him, because they don’t like what’s being planned or they want to provide some balance. If you’re not familiar with Bilderberg, all you really need to know is that it’s similar to the G20, but a bit behind the scenes and without much news coverage. The Lisbon Treaty (EU Constitution which overrides the Constitutions of each EU member country) did indeed pass after he reported it would, despite that Ireland and Poland were strongly opposing it at the time.
From his reports last summer —
Bilderberg is divided on whether to put into motion, “Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline and poverty … or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.”
On a more specific note, Estulin warns that Bilderberg are fostering a false picture of economic recovery, suckering investors into ploughing their money back into the stock market again only to later unleash another massive downturn which will create “massive losses and searing financial pain in the months ahead,” according to a Canada Free Press report.
According to Estulin, Bilderberg is assuming that U.S. unemployment figures will reach around 14% by the end of the year, almost doubling the current official figure of 8.1 per cent.
Estulin’s sources also tell him that Bilderberg will again attempt to push for the enactment of the Lisbon Treaty, a key centerpiece of the agenda to fully entrench a federal EU superstate, by forcing the Irish to vote again on the document in September/October despite having rejected it already, along with other European nations, in national referendums.
Ahh. Bilderberg…the ultimate conspiracy!
GREAT post.