Right…Wrong…and Caveats (by Mark St.Cyr)

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I was asked the other day what I thought about the markets and the tear they seem to be on once again. All I could do was shrug. The person then followed with “But you had so much to say before?” of course the person was trying to goad me but hey, it comes with the territory. 

As many of you know I have written many articles on why I believed the markets are not acting in ways one would presume. I wrote many times why I felt as I did and gave the reasons why. They’re all in the archives, and unlike most, I haven’t run away from what I’ve said or wrote. However, with all that said, as of right now my warnings could be looked as wrong. The market continues to climb higher by the day. Not only higher but within spitting distance for many indexes to have erased 2008 as if it never happened. No one could be happier at being wrong than yours truly. But saying I’m wrong doesn’t mean I was not “right” in my reasoning or my conclusions to the perils or pitfalls possible. (and are still very present)

As of this writing there have been a few things active in the markets that has never been present in its history. High Frequency Trading better known as HFT makes up more than 70% of all the daily trading on the exchanges. That info is per the exchanges themselves. HFT buys, holds then sells a stock in approximately a few milliseconds! How’s that for long-term investing?

In other words, its machines trading with machines. Remember the “Flash Crash?” That was caused by the machines. But so far so good I guess. Euro stability? Well, as of right now the 259th agreement on agreeing to agree sometime in the future if they agree seems to be working. But again as of this writing, there is NO agreement.

Talking heads are all over the financial channels where they were once stating the breakup of the Euro would be catastrophic for the US markets now say Greece would be a non-factor. Well that makes me feel much more secure I guess. Another point  that the “wicked smart crowd” told us over and over again was to watch all the money on the sidelines come racing back into the market when we broke above certain levels.

Well we’ve not only broke them, but we’ve broken levels above those also. How’s the volume? Monday’s volume was the lowest non-holiday trading day in a decade! Data points such as GDP, Unemployment? Well what was once considered bad is now good! Of course the way it’s said across the TV screens, “The signs of a healthy market is when it can go up on bad news.” Just makes one feel all fuzzy. But that’s what happens with fuzzy math I guess.  But the market is what it is, and right now it is up and it just may keep going to which no one will be happier than me.

But why I said what I said, and why I think what I think has not changed. And If I had to write it all over again, or had to talk on the subjects again I would not change a word.  I would only emphasis one point.

Hope for the best, plan for the worst, be prepared for both.