The following is excerpted from this week’s edition of Notes From the Rabbit Hole, NFTRH 224:
“Just the Facts”
To once again quote the man I respected more than any other market
professional I have come in contact with, [a late friend], we will list
“just the facts” in order to define a complicated, yet very interesting
period in time.
- Stock sentiment was at an extreme over-bearish level by what
Sentimtrader.com’s data label “dumb money” last summer and as expected, a
continuation rally of the bull market out of 2009 sprung from that
sentiment backdrop.
- The rally’s character is currently of one-way momentum compared to its jagged, up and down nerve-racking beginnings.
- The sentiment profile is now opposite to its over-bearish state (by dumb money) at the rally’s beginning.
- The bull remains in full force with a string of 4 sets of major higher highs and higher lows intact out of 2009.
- Major events over the last year included a resolution by the ECB to
bailout insolvent union members, the election in the US of a president
committed to entitlements and credit expansion, the commitment by the US
Fed to use increasingly inflationary policy to manage an economy it
deems below capacity, a Kabuki Dance in service to the pretense that the
Fiscal Cliff ™ debate was anything more than for show, a kicking of the
US debt ceiling can a bit further down the road, Chinese stimulus
operations and the election of a leader in Japan who called out the BOJ
and has committed to stimulating inflation in his country. Have we
missed anything? Yes, there was much more.
- Signs of economic expansion are cropping up in the economy, from the
anecdotal evidence of semiconductor equipment orders we noted last week
to a 53.1 reading on the ISM report to tepid jobs growth.
