MM, crash predictions from investment newsletter writers are usually very rare, since crashes are too. i always scan as many market opinions as possible to get an overview of the predominant thinking and my impression was that quite a few advisors got extremely cautious right around the time we put in the latest bottom. the subsequent rally has so far been met with a lot of disbelief, although i will admit that conviction is now inevitably on the rise.
ideally we should revisit the recent lows for a retest, to raise bearish sentiment another notch and then blast off to the moon. note that e.g. the PEI was calling for a crash as well, ditto Prechter, Drakulich and of course Crawford. however, no major supports were taken out by the indices and it should be obvious by now that the calls were premature. the DOW is only a few points from a new record high for chrissakes, in spite of the much lamented weak internals and all the other negatives that were paraded - even i did quite a bit of the parading i might add.
if the top was really put in on July 16 we should see a sharp reversal and a decisive break of support trend lines in the course of same and it should start yesterday. instead we melt up inexorably every day. it's on lousy volume and weak internals, but it's a melt-up just the same, there's no use being dogmatic about it. the bears are 100% right from an intellectual rigor standpoint since there is simply no way to defend the market's valuation based on fundamentals and it is even loonier to try and justify even higher valuations. but the end of this mania has been proclaimed many times in the past and it has simply buried one short after another with it's relentlessness.
just think for a moment - if 6,25% on the long bond and a Fed in hiking mode can't kill this beast what on earth can? whenever the bond market looks like it might do the job, we take a quick step back from the precipice and all the while get used to higher and higher yields. i remember people saying that 5,75% would be a psychological no-no for the stock market, then 6,0%, then 6,25% and so on. in a late stage mania people just don't care about these things. |
