Could Mick Jagger and the Rolling Stones have
been singing about the stock market in August when they wrote the song
"Nineteenth Nervous Breakdown?” As the major averages continue to
frustrate those those who think they got this market all figured out, we have
been savoring the comfort and safety of the sidelines during this expiration
week.
Incredibly, the market cannot trade in positive territory without the help
of some analyst making another “buy now or miss the boat! the market has
bottomed” research call (I use the word “research” here very,
very loosely). As ugliness in Europe and Asia overnight certainly cast a
negative tone on the opening for the U.S. markets this morning, you can’t help
but marvel at the multiple elements that we had foreseen many months ago
currently coming to the surface.
Months ago, we discussed the importance of the
U.S. dollar and how its plight would serve as advance warning for the equity
markets. It certainly now appears as though the USD has put in an epic top
that will last for several years. The top in the USD and the continued declining
interest rates in the U.S. should help facilitate the mass exodus of foreign
funds from our credit markets.
When this occurs, get ready for ugliness we have not
witnessed in our lifetime. Second, the deflationary forces of
the Bear are beginning to now come to the forefront. The lack of pricing power
coupled with the global recession that is taking shape will create a period of
corporate earnings weakness akin to no other we have seen in the past 70 years.
But, hey, we still have genius market strategists
on CNBC tell us (just about 5 minutes ago) that: “The U.S. borderline
recession has seen its bottom and we are now going into the recovery and
starting a new bull market.” To which I respond: “Get the
drug testing kits out like I suggested on Tuesday.”
Last night, a
very highly paid New York market technician stated in no uncertain terms that:
“The April lows that we observed in the Nasdaq are THE absolute lows and a
new bull market started immediately after those levels. There is no way that we
are going below those April figures.” Oh, I disagree, Mr. Weiss. We
are going to go way below those April levels and stay way below those April
levels for a very, very long time.
Levels to watch? I subscribe to Carolyn
Boroden’s assessment that "This Market
Sucks!!" How am I supposed
to follow that up?
The arrows are in my quiver and I’m waiting for
better opportunities.