Monday, April 5, 2010

Self-fulfilling Market

Does it take a genius to see where the market is headed and why the rally which began a year ago is probably the most overblown equity bubble of all time?

Probably. And you're probably not a genius, so you have to trust the talking (nodding) heads on CNBC and Fox Finance for direction. Or maybe your broker, or cabbie, or the shoeshine guy.

Stocks just keep going higher, and we all know that they shouldn't be where they are, especially when unemployment is still at 9.7% and the housing market is in the midst of a 10 year slump. Why complain? We're all getting richer.

Well, OK. Former VP Dick Cheney said "deficits don't matter." He also said the Iraqi resistance was in "their last throes." That was 2005. So, take your advice from him if you like, but many of us with just a little dose of common sense understand that deficits do matter and that Dick Cheney was - and is - a liar galore.

Dow 10,973.55, +46.48 (0.43%)
NASDAQ 2,429.53, +26.95 (1.12%)
S&P 500 1,187.44, +9.34 (0.79%)
NYSE Composite 7,600.93, +61.91 (0.82%)

Advancing issues socked it to decliners again, 4872-1690, almost a 3-1 margin; new highs beat new lows, 926-106. Volume, however, was so low that it now has become an embarrassment to any serious student of markets. The persistence of low volume in the market is indicative of one that is self-funded, and when the wheels come off, when the game is over, these very same self-funders will be rending each other's flesh, just like in 2008.

NYSE Volume 4,269,053,500
NASDAQ Volume 2,050,514,750

Crude oil broke through some key resistance and gained $1.75 on the day, closing at $86.62, the highest price in nearly 18 months. And it's done this in an environment full of surplus. We should expect Dick Cheney to come out of his crypt and declare that supply and demand doesn't matter, either.

Gold is closing in on its all-time high, gaining $7.80, to $1,132.90. Silver scored another 23 cents to finish at $18.10.

It's all just so perfect for a world full of suckers who don't want to feel any hardship.

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