Daily Archives: December 26, 2009

Ski-Bound and Gagged

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Happy Boxing Day, everyone. Well, another Christmas has passed. I trust everyone survived relatively unscathed.

1226-ho 

 

For myself, I'm off to my vacation home in the chilly winter wonderland of North Lake Tahoe for the upcoming week, so posts will be a touch scarcer than normal – – – and, given the trading week is devoid of any major economic reports, and it's a pretty-much-holiday week, I'm sure volume will be on the light side as well.

I will say, however, that the loss of faith in the market making any kind of downturn in the foreseeable future is becoming pervasive. Some of the most resolute bearish bloggers I read have made a downturn a question of "not when……….but if." Given my style of charting and trading, I look at a graph like the one below of the NASDAQ Composite and remain highly confident that this massive charade is going to end far sooner than 99.9% of the population believes.

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The trendlines above are based on the widest extremes in the history of the market over the past twenty years. Early in 2009, I would have never dreamed of prices ascending this far, but it looks like a challenge to that trendline's underside is taking place (the Fibonaccis have pretty much done jack squat).

At the same time, as I opened the Christmas edition of the New York Times, I saw three prominent stories, one of which was featured on the front page:

+ The passing of health care by the Senate, which pretty much makes the radical overhaul of nationalizing health care a foregone conclusion. The government's projection is a trillion dollars of new expenses over the next ten years, and we all know how government estimates turn out.

+ A story about how the heads of FNM and FRE are being given $6,000,000 over the next two years by the government for all the superb work they've done at these firms, and how the government is simultaneously removing its former $400 billion cap on their lifeline to these firms, since it isn't big enough.

+ And, finally, an article that Congress raised the debt ceiling in an emergency legislation to $12.4 trillion so the government wouldn't default. Reluctant legislators were persuaded to raise the ceiling based on a pledge – and I'm not making this up – that, sometime late in January, Congress will form a committee to figure out how to tackle all this debt through tax cuts and spending cuts.

We are all skipping around in the world of Alice in Wonderland, and things are going to get really interesting when reality – – – which made an ever-so-brief appearance in 2008 – – – comes back. Until then, I guess we just have to keep smoking weed with the lunatics without inhaling too deeply.