Before I go to bed, I always look at the overnight markets… So far, in early trading, only the Gold continues it onward and upward march higher… as of this writing its sitting near its “new” high at 1122.30… As we are in virgin territory, it is honestly difficult to predict at what point we will get some selling pressure to cool this market’s jets higher…I would continue to look for resistance at 1,125, 1,150, 1,175, and so forth in 25 dollar increments… Obviously the next big psychological number will be 1,500… In the dollar Index, we have seen the 75 dollar area be violated, with predictions of support around 66 on the dollar index… Resistance in the Euro at 1.50 will most likely become support, as this currency de-valuation plays itself out over the ensuing months.
Take Heed, if you are a bull in the stock indexes… I found two market gurus who are more than very bearish on this run up since March 09… The first was Gary Shilling, market economist, who is predicting a 35 percent collapse in stocks, back down with the S&P500 going back below the march low at 667… FYI, we ended today with the cash up at around the 1,100 level… so a break like that would be either 1) A glorious short-trade, if you are able to jump on board and ride it down, or 2) a kick to the groin of the US economy if the American consumer retreats further into safety mode…Mr. Shilling notes that the US consumer is still shell shocked, with saving rates increasing for the first time in 25 years…
A second market guru, Federated’s David Tice sees the S&P500 melting away all the way to 400… Yes you read it correctly… 400, or roughly 1/3 of its present “value” at 1,100…Again, if these boys are right, then we really are heading for financial Armageddon, because interest rates are already effectively at zero…
Kind of a scary scenario, really, and Halloween was 12 days ago….
On a final note, I also read an article which described how over this last 8 month, almost 4000 point rally in the DOW, only 7.8 Billion dollars in flowed into mutual funds, while in the past, a similar rally over a similar time frame would have attracted 150 Billion….All that money is sitting on the sidelines, or investing in commodities… The same article noted that only approximately 20 percent of the public is bullish… If this rally gets farther away from their perceptions, and they decide to plunge in at a future date… That will most likely be the exhaustion top, followed by a the mother of all corrections…
Good Night and Good Trading