The Straw That Breaks The Camel’s Back(side)
Have you seen the shape of a camel’s back? It slopes all the way down to its arse.
Have you seen the shape of the DOW? It looks like it’s about to slope all the way down to an arse too. And it’s about to make all of us look like one too … an arse, I mean.
I have been waiting for the market to give me that correction that would vindicate my postings from last year and early this year but it never came. The April Sucker’s Rally drew everyone into its awesome uptrend and I fell for it yet again, as if not learning my lesson from last year. I always knew that the underlying fundamentals were never there to support this rally and I also knew that the outlook for the market is dreary, bleak and anything but bullish in the medium to long term. I held to my analysis that there was always going to be more shit than shine for 2009 and 2010. I kept my faith that the next real rally won’t be till 2012.
Yet the power of this rally would have you abandon your faith for the draw of the trend. And what an attractive trend it has been. The more it ran up, the more you believed that you were missing out on a fabulous opportunity to buy the lows. And the lows kept getting higher. You kept the discipline and waited to buy the dip and the dip never came. You stared at bullish convergence day after day wondering if it wasn’t too late to take an entry and the days went by one by one, getting more and more convergent with each passing minute.
Then as the dream trend becomes more and more surreal, you stare, ponder and your finger gets itchy to take the trade. And before you know it, the market makes a 3% correction and you’re suddenly back from slumberland, returned to a bear market that had you entranced for three months. All the great news that once flooded the headlines are now reading dread and woe. All the bullish talk is suddenly hawkish and reserved. All the hope and hype is now hell and high water.
But in my truth, this 3% is not what I expected …. I expected worse … now that I am back from surreality, I won’t be accepting this uptrend unless we get a 40% pull back and resume the uptrend to a higher high and hold firmly above the 200DSMA for at least two weeks.
For now till the end of Q3, I expect the market to be range bound and very volatile. For the immediate future, I am looking at the market taking a beating in the next two weeks as the Fed brings on the bad news and the economic data takes a turn for the truth; really bad numbers that really reflect the true state of the economy.
The fund managers, meanwhile, will artificially inflate the market with their portfolio pumping at the end of this quarter only to get their portfolios smacked-down properly in July. Commodities will continue to rise as a reflection of the inflationary economy that has been laying low and under the radar in the last three months. The government will continue to buy up 10yr Treasuries in their vain attempt to keep the yield down as a lame excuse to not raise interest rates. Summers and Geithner will continue to screw up the already screwed up economy with more whacked-out plans to cover their screw ups from previous whacked out programs (read: dig a bigger hole to cover a smaller hole).
We have a bubble. It’s not an inflationary bubble, it’s not a credit crisis bubble, it’s also not a commodity bubble and it certainly is not a housing or financial bubble … it is a bubble of messed up plans, whacked out programs, rubbish news reporting and a pile-high collection of crap that won’t stay swept under the proverbial rug anymore. This Bail-&-Stimulus Bubble (BS Bubble) is going to blow up in Geithner’s and Summers’ faces and will turn Obama white. Like Madoff and Stanford before them, this global crisis is going to expose this BS Bubble for all its failures and make us all look like arses for reading into and believing everything we read.
The long and short of it is that I am re-instating my stand that this is going to last a long, long time. We won’t be getting a real rally till 2012 and we should remain within a 14,000 to 6,000 (DOW) range between now and the next 10 years. The credit crisis is going to be bigger than anyone of us can imagine when it truly comes to the fore and then the inflation factor is going to be a global problem that won’t go away quickly even with monetary policy shifts.
So what will be the straw that breaks the camel’s back? Just keep watching Summers and Geithner … the answer is right there in their faces.
In the meantime, I remain a happy puppy … er … contented camel … as long as the market keeps moving in wide ranges like what we have now.
Happy Humping! … er … Hunting!
(Sorry for the shitty post!)
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Look like head and shoulder.