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Force Majeure Markets~ How long can this Alice in Wonderland Market ignore the numbers?
We decided to begin to ride the bear market rally the first week March 2009.
We documented this on Charts with Hearts, no longer with Stockcharts.com. We have the file, and documented it here when we began this Word Press post a year ago.
When the gold-adjusted Dow topped last August, we sent out the word to be cautious and use Trailing Stops.
Gold and the S&P500 continued to climb the proverbial Wall of Worry.
http://stockcharts.com/charts/gallery.html?$indu:$gold
Now that most people are complacent or confident, we report the weary notes of caution sounded by Big4, currently almost twice as short as long.
We keep our Trailing Stops in place, using them to enter and exit positions with the courage and patience of contrary opinion at turning points.
In case inquiring minds are interested in the fundamental numbers Wall Street rarely reports, here are The Big Five:
First, Money Supply
Although the Fed and Treasury discontinued reporting M3, which is large deposits and repos at non-bank institutions (corporate shadow banks largely responsible for the deleveraging of the economy), private sources still continue to report M3.
http://www.shadowstats.com/alternate_data/money-supply-charts
We can see quite clearly M3 growth peaked at 17% in early January 2008 with the stock market, and slowed so much it descended into -3% territory in 2010.
In other words, this economy is not going anywhere soon, at least a year, probably longer, based on past lags between money supply and the economy that have been lengthening with a lower money multiplier.
http://research.stlouisfed.org/fred2/series/BASE
