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Bill, 13) Speaking of "consumer confidence", it is the highest level today since the summer of '68 (We had a 30% correction shortly thereafter in '68-'69). This pattern has been repeated with high c.c levels in first half of '73 (50% correction in 73-74 bear market), high c.c.'s in 78 prior to the deflationary period that lead to Interest rates spiked to 18% area which then piggybacked into double digit inflation (nobody would touch stocks from 79 to 82, stocks were dead, and gold and silver bullion was in). And the high c.c.'s in 87 prior to the crash. 14) Investor mass psychology has now reached manic proportions, with elements of '29, '68, '73, '87 and '90 now weaving a different web to catch the herd mentality. Unfortunately, as the market never fails to do, its payback time. As ye sow, so shall ye reap. Greed and fear of missing the next leg up have settled in like a frog in warm water about to get cooked into complacency. The average investor has given up his autonomy and independent thinking to the emotions of the crowd, experts and gurus and "buy any dips" , "buy and hold" and I'm in this thing for the long haul. Ask them that same question after they can't sleep at night b/ct they feel it in their pocket book through "paper losses" that begin to mount and take on a life of its own. They have given up their only right (the general public), the right to vote, TO SELL STOCK OF THEIR OWN ACCORD. When dark clouds or impending potential danger or risk fast approach, people head for cover. Are their storm clouds on the horizon now? 15)Record "personal debt levels" and bankruptcy filings are rampant. Their is a converse relationship b/w high consumer confidence levels and record stock prices. People feel good about themselves and for good reason. They feel they are getting ahead. But this leads them into a false sense of security that "nothing will ever go wrong". Investors are willing to "bid up" stocks to higher levels b/c they are optimistic in greater and greater returns to justify their reasoning. This optimistic mood is based on those who lend (banks) are confident that the borrower will have the ability to pay back the debt. But when debt levels become exhorbitant and increasingly difficult to pay back (late payments, delinquents et al), this confidence level becomes shaken and eventually erodes which leads to write-offs, a tightening of credit and higher interest rates. In short, denial is an important part in market psychology, particularly at or near a market top. Why am I suggesting we are near a change in wind direction and market correction? THE MARKETS MUST, BY DEFINITION, TURN WHEN THE MAJORITY OF THE MASSES ARE LOOKING FOR A CONTINUATION OF AN EXISTING UPWARD TREND. THIS IS ALL "NOISE" BUT UNFORTUNATELY ONE OF THESE DAYS SOME "DEAF EARS" ARE GOING TO HEAR THE THE BEAT OF AN UNFAMILIAR "STAMPEDE" AND YOU BETTER BE PREPARED OR GET OUT OF THE WAY WHEN IT HAPPENS FOR FEAR OF BEING EMOTIONALLY AND FINANCIALLY CRUSHED. good luck to all, keep your eyes and ears open and good trading. And one last thing, DON'T EVER UNDERESTIMATE WHAT IS GOING ON IN THE POLITICAL ENVIRONMENT RIGHT NOW B/C NOBODY IS EXPECTING THE UNEXPECTED. all one man's most humble opinion. jt |
