Taking Stock: Perspective

The CVI is still getting even a little stronger today, and the pullback that quite a few people have been waiting for is finally coming to fruition. That's what happens when stocks rally as much as they have in a short period of time. I'm thinking the same as what Dan Fitzpatrick was saying about there being quite a few people on the sidelines in cash, waiting for the pullback in order to get in the market at a lower level\price. In a sense, there is a sort of built-in belief that the market will start a new bull market, which normally starts up to within six months of the end of the recession. The quantitative and projected forecast for the end of the recession is around the beginning of next year, so we are within that range of the discounting mechanism of the market to take effect. I have also been taking into account the factor of government intervention (they really know how screw a market, eh?) because of the massive amounts of money that they have conjured up and has been finding its' way into the market (through Treasuries?).

From having been watching Dr. Nouriel Roubini in the videos that have been posted in various places (I had some audio of him also), he has been saying for some time that the U.S. will experience a period of stagnant growth, and possibly what he calls "Stag-deflation", starting next year. Welcome to the wonderful world of everyone writing down their monetary sins. That hardly supports a strong rally in earnings and domestic economic growth in the near future.

I wanted to share this video to show what I was referring to yesterday about what Dr. Leeb was saying. Some of the things that he mentions plays on the angle that I was thinking in regards to "irrational exhuberance", in the fact that he says that there are both rational and irrational markets and that the current one is very irrational. In other words, I concur and have the same sentiments that he has. Only the market itself will tell what will happen. It is funny that he mentions something about the possibility of the potential crash being something like what happened in 1929 and on Black Friday. I was thinking about Black Friday last night, simply because commodity prices before that crash were sky-high and that this time is somewhat similar. In Leeb's newsletter, he mentioned something about the possibility of the FOMC raising interest rates, which I think could definitely trigger the crash that he is calling for. Like today, the Dollar is having a little rally (probobly only to the 20DMA), which is also likely to happen if the FOMC raised interest rates. The slight contrarian view to that is the fact that the U.S. is deep in hock this time.