Long-time readers probably know I'm a pretty big Star Trek fan. This market reminds me somewhat of the Charlie X episode. Near the end, after young Charlie has taken over the ship, the crew on the bridge flip on every system they have. Charlie is overwhelmed by the complexity of everything going on around him at once, and he loses his grip.
I'm starting to picture the Feds in D.C. (principally Geithner and Obama) are the new Charlie X. Things are moving so fast (and in a bad direction) that they are flailing about. It doesn't seem like anyone is really in control anymore.
I am standing slack-jawed and agape at the market. The selling pressure is simply relentless. Look at this monthly graph of the Dow 30:
What we have above is:
- Unrelenting buying pressure back in 1995/1996 (can you believe stock markets used to behave that way?), tinted in green;
- A mirror image of unrelenting selling pressure over the past six months (tinted in magenta);
- A break in the very long-term Fibonacci fan line (circled in red);
- The next major support of the same fan line (circled in green), at around 4,800 or so on the Dow.
What would make the most sense, and the easiest trade, would be (a) a retracement to somewhere in the high 8000s, then (b) a final plunge to under 5,000.
But I've been waiting for "the retracement" ever since Henry Paulson still had hair. It's getting ridiculous. Sometimes I wonder if it'll ever come, or if we'll simply keep eroding our way down to sub-5,000 on the Dow.
My portfolios are doing extremely well (notwithstanding my IRA, which, being based on pure "lottery" plays, is down 16% this year), but I have a gnawing sense of dread.
