We have a bunch of economic data on tap for the market to get emotional over. Jerk to the left, jerk to the right; as if any one period’s data is anything other than a reason to game a market running on pure momentum.
And then we have Huey, Dooey, Louie and even a couple more popping out to dump even more signals on the market as we go full frontal Jawbone today:
“In addition, five Fed officials will be speaking on Thursday. From Milan, we’ll hear from Philadelphia Fed President Charles Plosser — his second speech in Europe this week — and Boston Fed President Eric Rosengren, who is a voting Federal Open Market Committee member. Dallas Fed President Richard Fisher, Fed. Gov. Sarah Bloom Raskin and San Francisco Fed President John Williams are also on tap to deliver speeches.”
It should be interesting if nothing else. Beyond any one day’s knee jerking, there is this to consider (graphics courtesy of Sentimentrader.com):
Smart Money vs. Dumb Money (current)
The ‘smart vs. dumb money’ structure is exactly opposite to what it was one year ago when we used this picture in support of a bullish stance:
Smart Money vs. Dumb Money (1 year ago)
And people just love stocks over bonds, almost as if there is a Great Rotation taking place or something. Ha ha ha…
Stocks to Bonds ratio
The bulls are right and those that have been bulls for a year have been right for a year; both of them. In full disclosure, I was bullish as appropriate last spring and summer and then proceeded to not nearly maximize that fact. That’s show biz.
Now I am bearish. I hope to maximize that stance. There is a case for higher stock prices later in 2013 or early 2014. But for now, this pig is over loved just as it was over hated a year ago.
Something just did not square as the S&P 500 came to the long-standing target range of 1550-1590. That was the tendency of the ‘dumb’ money to jerk bearish every time the market took a 1% or 2% dump.
Enter bubble dynamics at the behest of an aggressive and out of control Federal Reserve.
To put it in non-technical terms, here is how one might interpret the mind of the Fed, if only the Fed’s members were a) honest enough or b) able to clear the dull haze of bureaucratic myopia in order to see what they are actually doing…
“Get your ass up there you pig. We know that our only way out of this is to inflate an asset bubble, making the rich ever richer and the poor more disenfranchised and dependent upon the system. We are playing with printed and keystroked [funny] munny after all and so far that munny is doing exactly as we wish in trying to indicate a wealth effect in the stock market.”
Well finally, the public is buying it and upside blow off dynamics can now be anticipated.
We have been following this and other market sentiment data every week and now the dots are finally starting to flee the middle (neutral) ground they have held for too long now. Finally, people are getting too bullish a market that is too far above certain moving averages and making readily definable patterns that provide measured targets.
I do believe big changes could be coming in May or June for our dear FrankenMarket.
(e) = external link
The Deep End of the Risk Pool James Howard Kunstler 5.7.13
Comparisons Michael Ashton 5.7.13
The Story of Inequality in the US… Zero Hedge 5.7.13 (e) ***
The Hoover-Roosevelt Depression Revisited Mises.org 5.7.13 (e)
The Death of Truth Chris Hedges 5.7.13 (e)
Huge Jump in Bullish Sentiment B.I.G. 5.7.13 (e)
Financial Market Articles & News Biiwii.com/EWI 5.7.13
SS Report Due Out This Week Bruce Krasting 5.7.13 (e)
More market analysis, news and commentary
*** If you take the time to watch the video linked at ZH you’ll see the problems, which have only amplified since 2008; you’ll hear about inflation and a gold standard solution. I have beaten the crap out of the gold bugs over the last few months because I do not believe ideology is a reason to stand as a victim of criminality. When dealing with criminals, you need to… think like one in some ways.
But all that said, the system is rotten and to the benefit of criminals in high places. It needs to change. Golden handcuffs would do the trick. Oh wait, but Warren Buffett thinks gold is stupid; silly me.
“Are you intentionally trying to become the single most hated individual in “Goldbugsville”..??”
No, I live in Goldbugville. But that does not mean I should not write about what I see at any given time. I am alternately hated (or at least derided) by gold bugs, inflationists, deflationists, bulls and bears. I am also alternately patted on the back by these same club members when I happen to write things they favor.
The market decides when their dogmatic view is right and I just want to be in tune with the market. This site is not a ‘hey look at Gary carry the mantle for a particular orthodoxy’ site. It is a ‘get the market right or die trying’ site. Period.
That is because my job is to tell what I see and interpret, not to glad hand people. This crap about pissing off gold bugs is the least favorite part of my job. I remember when Tim Wood used to come with his obligatory gold bearish view on Puplava’s radio show years ago. He always seemed to have an apologetic tone in his voice.
Others feel obliged to disclaim that they are indeed gold bugs first before coming with bearish analysis. Well I don’t join clubs or follow leaders. If that makes people have hate in their being then they don’t belong at this site anyway. If I am pissing the right people off at the right macro pivot points I am doing my job.
I’ll be a stronger gold bull than the average card carrying gold bug when the time is right. That I can assure you. That is because I’ll have buying power because I thought for myself instead of following orthodoxy all the way down.
See? I told you. Seriously, by incoming emails and reviewing comments at other sites there seems to be a bubble forming. It is a bubble other than the general asset bubble (hello housing) that the US Fed is trying to foment. It is a bubble in ‘strong dollar’ and bull market resignation among the gold “community” and stock market bears, respectively.
There seems to be a bubble in confidence in the Fed and the markets its policy is stimulating. Each new up thrust uses events like ‘CYPRUS!!!’ just as it used ‘FISCAL CLIFF!!!’ and ‘SEQUESTER!!!’ and a hundred other inflammatory events to reset sentiment for these new lurches higher.
This market is feeding on the frightened, frenetic nature of today’s investors (and black boxes, Algo’s, etc.) every step of the way. The result is that bull wise guys and trend followers get to point to the Wall of Worry (WoW) that has seemed to be intact since the blow up in 2008.
I think the WoW is slowly being chipped away, but the market – aided by a skittish universe of players and a can-kicking Fed, just loves this atmosphere. Loves it.
Don’t get played by it. Jeez I mean don’t be one of the knee jerks. The people getting ridiculous on the US stock market now were ridiculous on gold in summer, 2011. What is so hard about this?
Well at least in theory. On the bigger picture this fantasy about an organic economy created by benevolent policy is just another mini mania cooked up by the sentiment backdrop. The public is so tired of the pain of the last 4 years that it has decided that it is a ‘new bull market’ (with new all-time highs in many indexes as proof) in what is probably the last year of the existing bull market that has been in play since March, 2009.
But these skittish knee jerks (ref. B.I.G.’s poll linked in the previous post) can help sustain and extend the up phase and/or topping process. On the other side, dynamic events that give gold a pop should not be cheered by gold bugs. They don’t last. The relic needs to rise of its own big picture fundamentals, not ‘rut roh’ moments like Cyprus.
If the market gets a decent correction – like to the 200 day averages – it could be a long time until the bull ends. If it just quickly digests Cyprus and the Fed plays ball tomorrow, the bull could flame out sooner rather than later.