Sunday, September 14, 2008

Reality? ...is that You?

last week on Conspiracy Day Trend & Value suggested exiting 'all short positions' -- including stocks. for a day or so that looked like a pretty good call. but the gap lower on S&P futures on this Evening of our Lord, reminds us that Reality still exerts at least some influence on Financial Markets. and it's possible that influence may be growing.

all I can say is Sorry, it appears I made a Bad Call. although this gap may well get filled overnight and the opportunity to get back in on a short from a good level may still come.

or this may be a final whipsaw before a 'Reflationary' trend takes hold. by reflationary, I mean Gold Up, Bonds Up, Stocks Up at the same time on a trend basis.

the Bond Market may be forcing the Company Store's hand here. Bond Futures are obviously trading characteristic of a Bubble now and I don't see how this can be resolved except through a parabolic blow-off top in prices across the length of the yield curve.

for my dollar, the two most probable scenarios here are Conflation (Gold Up, Bonds Up, Stocks Down) or Reflation (defined above). but whatever we end up getting the trend should be discernible by the middle of the week.

Aufpassen, Cuidado, Watch Yer Back. the markets are not your friends right now. there has rarely been a more prudent time to be paranoid.

I'm not saying to run and hide, I'm just suggesting not to get complacent.