Tuesday, January 17, 2012

17 Jan 2012

As Charles Hugh Smith pointed out on oftwominds.com over the weekend, this melt-up, gap-up action is allowing plenty of sales to happen behind the scenes at good prices.  I don't know when it will end because I am always early for predicting tops, but we are closer to the end of this rally than the beginning.

Check this out: 5 Day Total of US New Highs - New Lows  despite the SPX melting back up to near 52 week highs, it is quite clear that most stocks are in bear markets since April of 2010.  It is only a matter of time before the virus spreads to the indexes again.

Signalling a contraction in the real economy, the Baltic Dry Index has fallen off an absolute cliff.

 In the longest term I track, the RSI (bottom) is reaching overbought levels.  This index usually turns slowly so it can remain overbought or oversold for some time.

In the medium term, TSV (middle) is reaching for the ceiling.  We do have some space left, and we have some space left for the S&P target I set in mid December.  Either way, we are closer to a top than a bottom.  I won't try to predict how much longer we melt up or for how many more percent because it doesn't really matter in the grand scheme of things.

 Medium term flat on the day. 
Short term is confused, and for good reason with the endless gap up melt ups leading lambs to the slaughter.

"When God desires to destroy a thing, he entrusts its destruction to the thing itself. Every bad institution of this world ends by suicide."

"All the forces in the world are not so powerful as an idea whose time has come."

Victor Hugo (1802-1885)

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