Thursday, July 30, 2009
Generations of gloom, doom, fear and loathing have dominated the Hard Money / Gold Sympathizer FINANCIAL PRESS, pretty much assuring less than an objective view,to their own detriment. Not undeserved, but rather, well earned by less than transparent monetary maneuvers by the governmental monetary authorities, it generates suspicion.
Therefore, you find yourself flooded with waves from either the CRAMER ( another GOLDMAN SACHS alumni) and KUDLOW, et al, cheerleading Wall Street's moves, or the GATA/GOLD COMMITTEE Partisans, to whom all truth must be coated in Precious Metals.
This is an ugly and confusing situation, for as long as I have known it.
Lacking any workable model of crystal ball, I accepted the "Weight of the Evidence" approach long ago, to help me shut out all the noise. I would like to share a few pieces of the current evidence with you now, in the charts above.
On the 3 1/2 yr chart of $USB [ 30 yrs US Bonds ] you see relative stability until the Autumn of 2008 when Investors globally acted in a virtual stampede for safety, pushing the US 30 yr to record levels. That was a clear recognition that the safest place to temporarily park funds was in US Govt Securities. From then, to now, the US Bonds have declined to more stable Post-Panic levels. We are relatively stable for now. That is exhibit ONE in evidence.
Above the first chart [ of US Bonds ], you find Exhibit TWO, the volume representation of the Wilshire 5000 Index. While the WLSH is not exactly unweighted, it is representative and the volume IS turning UP, which is a condition I need to satisify before I think a move is valid.
First in line, but last on my evidence list is our old usual suspect, Mr. Nasty.
Clearly Mr. Nasty thinks that early May was a peak for Breadth action, and also sees mid July as a low for the same measure. The measure here still has slowing momentum up, and looks to show this as a peak, but wanting to go lower.
Therefore, simply looking at these three measures makes a case for fluctuation, with the best guess at the US successfully selling its debt, liquidity being diminished by one side and increased by another, leading to a stalemate, manifested by fluctuating market price levels. Right now there are no signs manifest of a panic in either direction, which of course could change in a heartbeat.
Here as in most other situations, some cash, sensitivity, awareness, Stop Orders and Order Limits are your most important tools. Objectivity in the way you use them will serve you well.