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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Mike Johnston who wrote (48968)1/7/2006 9:28:21 AM
From: westpacific  Read Replies (2) of 110194
 
Mike you may be right.....

Housing short, no way. There is no doubt the FED sees this as the only way out, the question is what can stop it.

Notice how he says anyone whom saves now will be punished BIG TIME. In other words if you do not speculate you will be wiped out. Nice world is it not.......

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Since mid November, $177.8 billions were added to the M3 money supply (Chart 2). The Fed did the same in May when the market appeared to be in BIG trouble. The Fed increased M3 six weeks in a row for a total of almost $150 billiion. That relentless supply of liquidity changed the course of the market. The Nasdaq went on to gain over 200 points from May to July. This is why we don't fight the Fed. We monitor money supply closely and we trade with the flow.

By all means, if the Fed keeps this up, eventually it's going to send us into a hyperinflationary recession. Everyone who saves now will be punished BIG time. But, before that catches up with the Fed's insanity, the market seems to be taking the steroid shots in stride. And, we can not pretend that we don't see what's happening.

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The Nasdaq TRIN Index has dropped from 2.01 on the last trading day of 2005 to 0.50, 0.50, and then 0.39 in the first three trading days of 2006. That to me is pendulum way over swung.

Monday and Tuesday gonna be interesting. Either we are in a new upward cycle that could last weeks or this week was just for the Bush roadshow. What a game, trade it or be wiped out. Forget emotion or opinion.

West
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