Hi, Gary from biiwii posting again at the invitation of Tim, with whom I feel a kindred kind of thing as hope begins to drain from the bull case, little by little.  It is such a pleasure participating in da Slope.

Here is an updated look at the VIX and its megaphone AKA reverse symmetrical triangle (reversal) pattern.

"NOW
HEAR THIS!" blares the VIX… "Greedy bulls have had their fun, held
sway for a good long while, morphed Hope '09 into Full Tout '09, got
Wall Street to bonus season and generally reenacted the wonderful 50%
rally in hope off of the 1929 crash. You know the one, after which the
real depression descended. Happy days are not here again and it is
unfortunate that most casino patrons will come to that realization
after I begin to rise in earnest. I have not decided yet whether to
give the bulls one more run at the highs, but I will decide before too
long. This megaphone through which I give you my warning is a reversal
pattern after all."

Okay, that is what the VIX says. What
I say is that it feels so much like a false dawn that it is alarming
how people seem to have gone about their business as we head for the
tepid recovery that policy makers, media and Wall Street seem to be
touting. At best we will suffer from the law of diminishing returns
under a new and intense cycle of inflation. At worst, we go down again
and induce yet more panicked inflationary policy.

This is going
to sound overly sensitive in a 'he's giving us more information than we
need to know' sort of way, but we took our kids to see the movie Kit Kittredge
pre-crash and with everything I knew was directly ahead, it was too
much for your blogger who sat there with his eyes welling up through
half of it (I tend to do that over some really corny things too :-)).
How about the depression backdrop in Cinderella Man? Intense, man.

The other night I watched The Crash of 1929
on PBS. It was made in 1990, and indeed was intended to warn of the
possibility back then that it could happen again. Well, how did that
work out for the bears? I have no doubt that with each recession (like
1990), a new round of Great Depression lore gets whooped up, each time
providing the 'lever' for new and heroic inflation policy.

But
still, it feels like another hard down is coming and a lot of the data
I look at supports that idea. It feels like Indian Summer, just like
the one due here in New England imminently. There is a lot of noise out
there right now from the respective touts pitching their respective
wares in their respective sectors and asset classes. I expect it to all
fade away as the VIX trumpets the onset of stage 2, the GSR rampages
higher and Uncle Buck, pissed off like never before, stages a furious
short covering rally.

VIX: "That is all!"