The headline today is a reflection of our headline Bottom,Bottom, Bottom on March 3, 2009, you can read the post in the archives. We were three days early on that call, maybe we will be better this time. At that time we talked about the setup for a bullish scenario developing. Four years later, while some of the good pieces that we envisioned then were put in place by Obama, unfortunately too much of this rally has been about the funny money man, Ben Bernanke. And therein lies the risk for investors now.
This is not about being bearish on the stock market, it is about taking risk off of your asset base at a time when the underpinnings are fragile. I have to admit that while I started as a trader and analyst for hedgers in 1970, I prefer trading bear markets to bull markets and was very anxious on that March 2009 call. When one steps back and looks at what has turned out to be the probably the most spectacular parabolic bear market bounce in history, you see that the underpinnings are questionable. Trading volume has not been great and the little investor has not been involved. While the Wall Street and CNBC crowd are panting at the window looking for suckers, they have not shown up. One reason is that the long-term sell signal in July of 2008 at around 1270 on the S&P 500 Index is still in place. Unless you are a trader with a Bernanke crush, there has been no reason to play. This leaves a market with a lot of air in it, around 20 percent of the current price.
And let us also keep in mind, that while the market is looking for the little guy suckers, who called the 2012 election, the fat cats or the little guy?
The technical Numbers have not changed since the last presentation of 2/28/13. We have been able to maintain our asset deflation stance over the past six months by a combination of short gold and commodities. Our short T-Bond trade that we put on last July was pulled a few weeks ago when T-Bonds bottomed, a bottom for what I think will be their final and most irrational rally over the coming months. When we look through our individual markets, markets like gold, copper, cattle, corn, FXI (China stock market ETF) we see a lot of markets sitting with sell signals that we initiated some time ago. What makes everyone feel that the stock markets are immune to deficit reduction?