"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Friday, November 8, 2013

Bulls Buy the Dip in Stocks - Get Rewarded Once Again

Pavlov's Dogs could not have been conditioned any better than those who have used every single bout of weakness in US equities to reload the boat and secure more stocks.

The stronger-than-expected jobs number ( combined with upward revisions to previous months ) initially jolted the market as TAPERING FEARS were running rampant as soon as the numbers hit. Down went stocks as traders began crying that the punch bowl was going to be taken away. Not to fear however; dip buyers began talking up the numbers as a good thing and thus positive for stocks ( Heads - I win; Tails - you lose). The technical support zone held and back up they went.

Note that the volume is very large on the move higher which no doubt is a great deal of short covering as once again attempting to short this market has proven to be a fool's errand. At some point, and I honestly do not have the faintest idea when, the bulls will go to the well once too often and we will finally see this bubble pop, but for now, it continues to shrug off any warnings of internal deterioration.

Each time this market has moved lower, bulls have moved in, bought the dip and then been rewarded by a move to yet another all time high. However, this time around we do have the POTENTIAL for a double top up above 1770. Shellshocked bears are going to be watching very closely for any signs of this market stalling  out. They have gone back into hibernation today but will awaken in a surly mood if the technical chart tells them to pounce.


  1. Huge volume into KRE and XLF says it all.

    Another major intermediate low was reached yesterday.

    Stocks are surging because most input costs are cratering and profit margins are soaring.

    Just look at DBA, down 12 out of the last 14 days, that $2.50 Starbucks brownie that cost 14 cents to make last year is now down to 8 cents as of today.

    We are now living in a glorious age whereby the faster we print, inflation drops even faster, and stocks continue to climb the wall of worry.

    Global investors are now in an absolute panic to invest in U.S. dollars and U.S. common stocks, as we are the envy of the world.

    1. UNLESS YOU ARE ONE OF THOSE SMALL BUSINESS 's Or a private sector worker trying to get a full time job.

    2. KRE - So following this logic: Regional banks are the ones that actually lend money. Money lending increases M2. Coupled with taking employment statistics at face value + decent GDP growth in Q3--could we at least conceive of inflation now? With the exception of SBUX, most makers of things haven't improved gross margins over a longer time frame (5-10 yr)--i.e. we're not in a new era where things are magically made without input costs.

      What if we get macro growth plus QE?

    3. Mark

      You really should run for office or at the very least get a job as the press secretary for the Fed.
      Your pronouncements have a real big brother propaganda feel to them.

    4. Marks world... he is holding the gun at bottom of article.http://www.zerohedge.com/news/2013-11-08/guest-post-obamas-socialism-experiment-brought-home

  2. Leverage of hedges. Dan I think even though the big banks are not shorting GOLD they sure are feeding the equity frenzy.

  3. http://www.zerohedge.com/news/2013-11-08/stunning-magic-new-normal-hedge-fund-leverage

  4. I suppose what is happening to gold longs will happen to DOW shorts.
    Like Armstrong has stated (I know I know..I hate to quote the guy..but) the rally in gold will start when every one of the Gold bulls has been thoroughly beaten,discredited and destroyed.
    Same goes for the equity Bears.
    This is a scorched earth policy everyone.

    1. Yeah, I agree that we have to move to the extremes to generate the energy to reverse trend. Once every cat is in the Dow and calling for higher and higher highs, time to bail. I still think we need to lose some in the equities before they move much higher, but may take a few weeks to emerge...

  5. Dean did you notice the hui gained today. The power s that be must have felt sorry for us.


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