Tuesday, December 1, 2009

back to basics:

another terrible day so I'm choosing to wipe it away.

I am 60% cash now and not planning to make any big moves for the rest of the year.

I am simply observing charts and seeing the cracks in the market appear.  The push up is almost 100% stimulus and printing.  There are a few bright spots like AMZN but the valuation is ridiculous.

The cracks I see now are a flat  JNK etf.

Investors seem to no longer pay up for debt.  Leaders in finance: axp, jpm and aig have peaked.  GS, BAC, and C also seem to have faded.

Utilities is one of the strongest sectors now.  Natural gas is in a glut.

The only question really is how long this can keep up?  Is there a bottom to the dollar?  And even if there isn't, can risk trade go on indefinitely with few signs of improvement?

Obviously, the charts will show the way.  Goldman peaked almost 2 months ago:

 However, it is not ready to collapse.

 The retail index RTH is almost at the peak of the collapse in the summer of 2008.  What a run for retail. Do people really want to be new buyers now?  Really?

  Just how long can this market keep doing this?  I don't know, but there are a few warning signs now.  This is all about stimulus... but eventually, it becomes about valuation and fear and reality too.

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