The 'lunatic fringe of bears' come out of hibernation every pre- summer. I have been told that someone has quoted that lunatic bulls have overtaken the market, hold on rather it is the lunatic fringe that does not know what to do in this trending market. If keeping cash and remaining in cash and being on the sideline is a virtue what the hell you are dong on SI wasting ten hours a day.
Going back few years the logic of lunatic fringe is unsustainable, If you look at SPX chart with 20 days ma and 50 days ma, you may find that since Oct 97. We can identify 7 occasions where 20 days ma has solidly flirted with 50 days ma, out of these 7 occasions two occasion this 20 days ma broke through the 50 days a resulted in huge drops that was in Oct 97 and Oct 98. Now we are seeing the same thing happening again the 20 days ma is kissing the 50 days and rather have gone under it slightly, on 5 other occasions it turned around to post solid gains. Here in my opinion relevant thing to do would be to highlight the salient features of the breaks and huge melt-ups..
1- On occasion we have seen break below big time, Oct 97 was start of ASEAN crisis some CPI fears some overheating threats, it was more of a inflationary breakdown.
2- The second occasion was in Oct 98 it was again deflationary and over capacity threats, the 'ice age' which bears were dangling on the threads . The talks of major closures and technologies are like bell-bottoms out of fashion kind of guru claims.
These occasions served a left hook on the chin, which my dear gurus of SI if they would have ounce of 'honor of calls' should have resigned from writing, and followed threads like Ideas. ggg They anyway would have not fared bad.
Now coming to the other five occasions where we saw this flirtatious move of 20 days ma towards 50 days ma and resulted in a huge melt-up each time were times when earnings surprises jolted the bears to the core. Each break out is preceded by a basing period whereas the fall is like a straight cliff, hitting the lows and back up like a rocket.
The deduction I want to make is that we have now similar inflationary fears and Fed increases expectations, if the coming numbers confirm the trend we may see a fed tightening, hence we may see that the posture of fed has all the potential to get this break below. In such a case since Oct 97 and Oct 98 breaks led to violation of 200 days ma. I would not be surprised that we may even test on SPX below 200 days ma to 1330-1338 area. I think market needs to be charted and once I chart for you a course I actually shut the rumormongers and the self styled bear in their cage of ' bird brain ego maniacal mentality'. They have been locked out of reality for two long it seems that someone has just thrown the keys away. Now lets get down to business instead of lamenting on lost opportunity and silly claims of calling the people who have been on the right side of the market as 'control of lunatics. I will invite the lunatic fringe of SI to get out of short of INTC and look at the picture, trade like bulls we cover all basis up and down and I dare you I will get it before you guys have the slightest whiff of it.. |
