This Week: Sell the Rallies

The stock market may now be characterized as prone to technical bounces while remaining in a downward trend.  From a technical perspective, any time the market starts to move up, it is amplified by some short covering, and then takes a few days of a relief rally.  When the technical fade begins, the smart money starts to sell the rally and down again the market goes.

Any talking head who tells you that this market is a buying opportunity has his/her head screwed on backwards.  The only buys are the kind of value plays that the likes of Buffett are pulling off.  That is, it is very much a stock picker’s market.

Recession plus inflation plus a credit crisis plus a softening European economy plus an inflation-plagued Chinese economy plus Russian strong-arming in natural gas plus two leading presidential candidates who are ignoramuses on economics plus a rising long bond in the face of Fed rate cuts does not a bull market make.

Don’t Miss This
Now, you may find the following video of a speech I made in 2006 to be interesting for two reasons. First, it illustrates how you can be your own forecaster – a useful tool for macro traders.  Second, the forecast in the speech was eerily prescient regarding current conditions. Click here for video