What was all that worry this week – fuhgeddaboudit!
Nothing white-washes a wall of worry like misdirection. Wave something shiny in front of investors – like gold going over $1,150 an ounce and everything must be fine in the markets. What’s funny to a grumpy old fundamentalist like me is that gold is flying while the economy is “great” and the financials are in “great shape” and inflation is “tame” and crises in Greece, California, New York etc., etc. are nothing to worry about. So what exactly is the premise for buying gold?
That’s what makes this such an interesting market right now – the doom and gloom crowd are loading up on commodities as they expect the global markets to collapse and nations to either default on their debts, making their fiat currencies worthless or possibly crank up the printing presses and devalue the same fiat currencies while the bulls think none of that stuff matters at all so they are buying commodities because there’s going to be this amazing return of demand in sunshine and lollipop land.
We’re thrilled to be mainly in cash and watching this nonsense from the sidelines, hanging onto our fiat currency for the moment. Over in our “Chart School” this morning, Pragmatic Capitalist makes the following observation:
We’ve joked about the recent rally and how, if you were new to the market, you might think that there was an SEC ban on all selling. We all know the stats by now. Stocks have risen in 70%+ of all sessions for over double digit gains over the last 2 months. Monday’s are almost guaranteed 1% rallies. Volume is always low. Declines are never more than 0.2%. But this all pales in comparison to what has happened in the banking sector. The banks have rallied a jaw-dropping 83% of the time during the recent rally. Out of the 41 previous sessions just 7 of them have been to the downside and just 3 of those were 1% declines. Over the course of the move the banks have surged 21.5%. You could certainly call the banks the most hated sector in the entire U.S. economy so it’s only appropriate that the banks surge over the course of the world’s most hated rally….
Also this morning, David Grandey has a great rundown of a dozen stocks and funds that are clearly making double tops including UYM, V, & ROM so it will be interesting to see if these indivdual names are signaling weakening internals to the…
