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Just re-read an article: "Boxed In: A technician sees no way out-Just down-for Overpriced Stocks." A few quotes "I remain adamantly bearish because the characteristics of a major stock-market top continue to proliferate. Strength is narrow..."It's just that we have a set of circumstances here in the markets from which there is almost no happy way out, whether it happens on a schedule I'd like or not. Major bear markets always start from overvaluation and with public participation at the extreme-and no matter how you measure valuation, you basically have stocks as high as you've had them in other eras that in retrospect turned out to be the most outrageous markets of all time. And on the latter score, we've seen record mutual fund inflows and initial public offerings-which certainly point to public involvement on a massive scale-which is the single most important characteristic present at all major stock-market highs." "The public are only buyers; they're unsophisticated as to the pricing of securities and their understanding of the business." He goes on to site the extremely high consumer confidence numbers and the carnage that has followed previous extreme readings in consumer confidence. Consumer credit growth of 50% while the economy grew only 12%. Also sited was the divergence of a weakening bond market while the stock market kept hitting new highs. "Heating oil futures are at two-year highs. Copper futures are at four month highs" The labor market if very tight, as can be seen from the initial -unemployment claims data, unemployment at 5.2% and a rising trend in average hourly earnings." No, that was not a typo-the 5.2%. This was an exceptionally well written article from a Barrons interview with former Bull-then converted, Jim Finucane on Nov. 11, 1966., The initial question the interviewer asked was "Jim, what happened to Armageddon? The market has now made it through October, past the election and all the way to 6200" This is not to shed a negative light on the Mr. Finucane, or to imply that current bearish arguments will similarly be cast aside by the raging bull. One could even argue that Mr. Finucane was correct in his arguments, and that rather than negating his arguments, the run to 11,000 only heightens the extreme danger, as most of his arguments are still valid, only more magnified by the unforseen extent of the mania but...it is still sobering to reflect how this market has worked its way out of boxes of no escape, like a modern Houdini. Mike |
