Tuesday/Thursday Mirror

It is now obvious that the selling in stocks, bonds and commodities was done to pay for the GM IPO. The government’s “illegal tie-down” made to brokerage companies to get this deal done was clear. And it remains so C can continue to be liquidated. Ain’t government participation in the equity markets grand?

Now that the 20 or 30 billion dollar overhang is out of the way, the onward march of liquidity can prevail–at least for today. But remember, it is option expiration tomorrow and today’s action is roughly inverse to Tuesday’s action. Tit for tat…

We are in the process of establishing a new and higher trading range that will end up looking similar to–but inverse–to the bottom made over the summer. At that time the economy was slow. That, btw, is normal in summertime. Now it “appears” that the economy is picking up. But it is purely seasonal, a function of the Nov. 15- Jan. 15 shopping season and everything that goes along with it. Mark my words, it will all disappear shortly thereafter.

For those of you that did not have a chance to liquidate and lighten up into strength over the past few weeks, you have another chance. There will soon be tax selling and the expectation of new and higher capital gains taxes next year.

Intermediate term “cycle traders” should continue to liquidate or raise stops significantly. Traders–enjoy the volatility as our new and higher trading range will work to further define itself throughout the holiday season.

Tomorrow is the Government’s payday for bailing out the Democrat’s primary voting block, the Auto Union. And don’t worry, the Union is selling some stock too. Taxpayer investment is about $80 billion, give or take few Viagra tablets.

The deal must go without a hitch and that is why the market is sedate today. There is a bit of a bounce, but volume is light and there is little follow-through in anything. The key continues to be commodity prices. They all made textbook parabolic blow-off tops last week, reversed and moved sharply away from their peaks. That usually means that their near term tops will be significant and perhaps long lasting.

There remains “hope” that there will be “Thanksgiving Plenty” for speculators because we’ve moved from overbought to oversold. Well Jack, lemme ask ya this: How long were we overbought? Since September 2, one day after the rally began. The overbought oscillator remained between 70-99% from the second day of the rally until November 10. Can we stay oversold for a while? What do you think?

This is “Bizzaro Market”. September and October was the World’s Fair. November and December won’t be.

Bizzaro World continues unabated. But this world is starting to make sense.

The market continues to go to extremes and every buy and sell signal is greeted with a fakeout. Then, once everyone is looking the wrong way, the hammer drops. This is happening over and over again and soon everyone will know the game.

I find it amazing that AGAIN the majority of investors and the press takes a market move and is extrapolating it to the economy–and that it is believed–especially in commodities.

Even at these levels, the financial/speculative demand for all manner of commodity assets will serve to strangle the economy. The pickup in economic numbers is nothing more than a seasonal illusion, just in time for the holiday shopping season.

We have been begging for you to lighten up–for the past 3 weeks–at the peak of market strength…Some damage is being done today and a test of SPX 1150-1160 wil be first support…

Expect a new and higher trading range for the rest of the year–similar to the one we muddled through during the summer–SPX 1130-1250

Has the yield on the ten year Treasury bottomed? It is doing the same thing it did last year during QEI…Can you say 3.2%?

Will it or won’t it get through the downtrend. I say it will…

“They” told you to sell stocks over the summer that were down 40%. Only after you were out and they rallied 25% did they tell you to get back in.

Listening to “them”, has whipsawed you into oblivion. We’ve been asking you to lighten up. If you didn’t, then chill.  Here’s what to do now…