Brute Force

The market responded to a plethora of good news today.

More people were hired than were fired for the holiday season. People are spending money this holiday season. China stopped stepping on the throat of banks this holiday season. GS raised GDP estimates this holiday season. It is the first day of the month in the last month of the year, during the holiday season. And the FED gave the ECB another trillion dollars this holiday season.

This is not your Christmas rally. Not yet. Ben Shalom Bernanke gave the world the most joyful Hanukkah present ever.

We’ve been on record saying that the up cycle that began on September 1st has ended and that we are now, again, in a trading range market. Our new range is similar to the summers SPX 100 point range with the exception of being 12-14% higher and at the top of the yearly range. Even after today’s action, most indices are in a new 100 or so point SPX range, though the Dow Transports have broken out–giving Dow Theorists a woody.

This kind of action, based on the news–real or imagined–is a novel concept. The markets are supposed to be a discounting mechanism toward future earnings or macroeconomic fundamentals. Never mind that it is the holiday season, where, during a 6 week period, a full one-third of the year’s business is done. The first day of the month was front-loaded with a another trillion hard dollars from the FED and the ECB, and trillions more in “soft dollars”. Today was a bigger stimulus than QEII and the market’s reaction was larger and more substantial as well.

This holiday season was progressing satisfactorily before today, yet the fundamentals from the worlds banking system remain the root of all our economic problems. Today’s action simply papers it over, again. There will eventually be a day of reckoning. But not now and not after more market insanity. But the investor attitude of “risk off/risk on” based on daily, weekly or monthly stimulus is the height of “Money Manager Mental Illness”. Now everyone will be playing follow the leader, so extremes will be reached by option expiration. Then, when we least expect it, capital gains and dividend taxes will be raised. But it doesn’t matter at this moment. Use the insanity to your advantage.

We are still long approximately 25 stocks and recently shorted 1. We began to sell some of the stocks bought in the summer and raised the stops for most. This insane risk-on rally will be my opportunity to sell almost every stock and prepare for the next cycle. Remember, my plans are intermediate term in nature, not short term. I will have several new stocks to buy highlighted over the weekend, but this is the kind of market where I’m happy to create a taxable event, payable next April.

The stock market is playing with us lately. We are “doing work” around the Dow 11k/SPX 1180/Nasdaq 2500 area. In fact, we have been around this area since OCTOBER 4th! In all that time, there have been some great up days and some damaging down days. But like other times since the end of QEI, there is little follow-through.

We know that we live in “Bizzaro Market” where everything is backwards. We also live in a time where traditional technical analysis does not work. Since the market structure has been warped and perverted, so must our analysis of time and price. The caveat is that traditional metrics DO work, sometimes, just not the stuff that most are looking at.

Right now is the time of year reserved for optimists. But there is a plethora of nasty things out there that could be larger than any wall of worry. There is also the perception and new consensus that things are getting better for our economy. They are just seasonal and you’ll know that at the end of the first quarter of 2011.

But this is AMERICA dammit! No bullshit Euro-trash is going to keep us down and neither will the Chinese machine slow our holiday consumption. In fact, they are getting ready to open the spigots again after this brief “pause that refreshes”. Just keep your eyes on copper.

Today is the first day back from the long holiday and it is dominated not by “us”, but by the visiting team. You know, the nervous Euros and the fearful Asians, both having a crisis of their own. With low volume, it is a lock to get the market recovering in the afternoon as the foreign business is done in the morning. Also, on my live video show this morning, I chatted about a “morning dip and and afternoon comeback”

The month end/beginning is a powerful time for asset allocation strategies. Markets have held their up-trend. The bias is to the upside. BUT after that will be tax-loss selling, profit taking and my guess is that there could be a very large rush to beat the new and higher capital gains and dividend taxes. Get ready…

Has Obama cancelled defense spending? Don’t think so…This is non-momentum and low risk. And if it’s not bottoming, I’ll eat my hat…

As seen on CreateCoin Premium. http://cc.ibankcoin.com/

At this time yesterday we examined the market and noticed that the only two powerful up days this month were negated by yesterday’s action.

Today is a complete and perfect mirror of yesterday. Yesterday was a 90% down day. Today is almost a 90% up day. Almost every sector was down yesterday. Today almost every sector is up. Yesterday, my screen was an ocean of red, today green.

The Turkey Gods have won. Happy Thanksgiving!

So, this is the month that the FED has come to the market’s rescue–and that the economy is proving it is in a recovery. Remember, this is “Bizzaro Market”. The economy is bouncing for the holiday season. It is only seasonal.

The stock market has had exactly 2 good up days this month. The first was when you were supposed to “sell the fact” of QEII on 11/4. That just caught almost everyone leaning the wrong way–near term. Then another good day last Thursday on 11/18, the day before option expiration.

Both of those gains–in their entirety–have been given completely back and we are now in the process of testing those multi-Doji Stars that most thought would mark the top. They extend from around SPX 1170 to 1190. They are also a very important area of support.

Sure, you can keep your eye on the momo favorites, but you’d be missing what is really been going on in the overall market. It has been a double-top distribution for equities, plain and simple. The late money is almost officially “bagged” for now, except in certain select names. In commodities it has been a parabolic blow-off top and reversal. Most commodities have moved significantly away from their peaks to signify formidable intermedite term tops.

These are technical facts that will be difficult to dismiss, even in our current warped market structure.

The cycle that began in the summer, ended on November 4. We are in the process of mirroring the summer trading range except about 100 SPX points higher. Better get used to it or you’ll feel a new noose around your neck.

The one good thing I can immediately think of is how well The PPT works in a trading range… Happy Thanksgiving!

Morning everyone! This is the week where everyone looks forward to being groped in the airport, so on your way!

We will host our usual morning show Monday through Wednesday this week. All passwords are the same as last week. All weekly updates will be published by Wednesday.

The show used to be here and free every morning, but the only way to see it now is here:

https://www.scottbleier.com/affiliate/16