Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Crimson Ghost who wrote (25120)	3/8/2005 2:06:42 PM
From: mishedlo	Read Replies (2) of 116555

Heinz Sighting! well, i regard the break-out of the Dow to a new high for the move combined with non-confirmation by the NDX as a major red flag/topping signal. also, the trannies made a new all time high, which is unconfirmed by the INDU. so imo the market is now living on borrowed time. note: the 'fearless forecasters' poll, which had a majority of bears all the way up from the March '03 lows to the Dec. 04 highs has sported a huge majority of bulls for several weeks in a row. a huge bull majority in 9 weeks out of the past 10 as it were. imo it is almost certain that they will be wrong again. also, the structure of the interest rate related futures markets suggests a big rally in all rate maturities is about to occur (speculators have massive record net short positions in everything from eurodollars to 10 yr. notes. and the bearish consensus in Rydex bond funds remains well over 99%). the only triggers that i can imagine are a faltering RE bubble as well as a stock market sell-off. industrial metals seem to be in the blow-off stage, and the same goes for crude oil and energy in general. how far that will carry is anyone's guess, but the eventual denouement is an absolute certainty. the XOI making new highs in this blow-off move is a typical last gasp for the stock market (the same happened in 1987, although the XOI actually topped ahead of the Dow on that occasion. still, a blow-off rally in energy stocks is a traditional top marker). re. gold, like i said previously, i would expect a test of the late 04 high, probably coinciding with a test of the XAU's late '03 high. but i don't see a whole lot more short/intermediate term upside than that to be honest. rather i would expect those tests to result in yet another big correction - and that upcoming correction low a few months hence will probably be the real (i.e. long term) buying opportunity. short term there's a little bit more room for inflows into the Rydex pm fund, but it's not the bullish situation anymore that prevailed a few weeks ago. a new opportunity will present itself in due time.

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