In that case, good timing can only happen for nimble traders. The probability of you getting it right is usually small. And the probability for profitability is even smaller because the market on the whole is losing money.

As I have said that stocks should rally towards April, it had arrived quite a bit later than I expected, but arrived nevertheless. The question is how long will it last, and how far will it go?

My original tentative sell-out date was about the third week of April, and it’s almost here. Since the stock markets started to rally later than I have expected, I’m willing to stay out partially into May and possibly beyond. I believe the counter rally will continue to be very bumpy, with violent pullbacks and also dramatic rises. However, this is a COUNTER RALLY. What I meant by that is that I believe that there will be new lows probably within three years (at least on the gold-price adjusted basis).

Is gold in a bubble?

One of my colleagues hasrepeatedly asked me this question. I am quite clear on the answer: “NO”.

Everything is possible now with the unraveling speed of Wall Street's 700 trillion derivatives. Which of the following scenario may come true? Maybe all of them.

1. Dow at 3500 in 2011.
2. Gold at 5000 in 2016.
3. S&P 500 bottoms at 400.
4. The economic depression lasts more than 20 years until 2032/2033. This is not coming from me, but from the best economist that I know.
5. All major banks nationalized at 80% or more, with stocks trading at penny levels by the end of 2009, continuing to extract hundred of billions every quarter from taxpayers to cover their derivative losses. Why is there no one outraged by benefits going to all the counterparties of the banks? The losses of the banks are the gains for the counter parties of the banks, which are being paid by all the US taxpayers, and eventually by the entire world through monetization and inflation.

My own crystal ball is showing me that the stock markets will literally plummet another 50% to 60% in the second half of 2009, deflating everything until 2011, after which inflation gradually accelerates towards 2016, and wipes out all the cash holders. I predict in less than 15 years, there will be a hungry and unemployed mob rioting in the streets of Washington DC.

What should be the fair price of oil? The fair price is obviously the market price. But the price oscillation is really too big to be “credible”. From $51 to $147 in 1.5 years, and then from $147 to $36 in 4 to 5 months, do you know anything that you buy everyday that changes price so much (besides oil-related stuffs)?

Market price is always right (for the very second), but from such big oscillation, it is obviously that the market is extremely short-sighted. Rephrasing it in mathematical terms, the best predictor for the near term price is the current market price, but the prediction power of the current market price further out in time is essentially zero. And that is the point that I want to make: the current oil price is probably reflecting very little with the fundamental picture of the coming oil depletion.

Wishing to lower the long term interest rates so that housing markets will not deflate or collapse, the Federal Reserve does not learn from financial history that ALL financial bubbles cannot be reflated. Not a single bubble in human history that I know of was reflated over its peak in the duration of less than 20 or even 100 years. In fact, bubbles like the Tulip bubble never get reflated again. The only way to save this economy is to have a dramatically lower US dollar to create mild to high inflation. That is the only way to sustain or increase the housing nominal prices at the current level, while let the housing markets slowly go back to a healthy balance between supply and demand at the inflation-adjusted price. With higher inflation, there will be higher rents. With higher rents, the housing prices are automatically supported. Lowering the long term interest rates is simply not sustainable. It is creating unnecessary further dislocation of precious capital in the marketplace.

We just passed the mid-point (2007/2/27) of the current 52-year cycle of a private wave of economic confidence, which will last until 2033. I would rather put this private wave as a non-public wave, meaning that gradually we will be losing more and more confidence in public government (and government bonds too). If the economic confidence model by Martin Armstrong is really correct, I think you may add another bubble after the bond bubble, which could be the gold bubble.

The current bond trading is NOT consistent with a stock market recovery. This is putting big fears for my projected March/April stock market rebound.

The 30-year treasury bonds have broken the all time low, and currently trading at about 3.3% (for the next 30 years). Is USA heading into a Japanese-style 20+ years recession?

Did you see it at tulving.com? I saw it, and was still contemplating whether I should pay $129 premium over spot price, or more than 15% over spot. This morning waking up, it’s ALL gone. Incredible. Minimum order was about $5K dollar, and it’s all gone in less than 24 hours, not to mention that I believe it was available mostly just during market non-trading hours.

From Reuters: “I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses,” Chairman Sheila Bair said in an interview with the paper.

First of all, do you really think that FDIC can sell the assets of the failed banks at the prices that FDIC thinks they can fetch? So far, FDIC has been paying 50% of the uninsured deposits immediately. I think that’s simply ridiculous, especially in the case of IndyMac. For some banks, their net worth can be negative. There may be nothing left but debts after selling everything off.

Beginning around September and continuing into next year, I believe alternative energies should exhibit a strong performance going forward.

Obviously, I don’t expect Fed will raise interest rates in this meeting to “combat inflation” - as if that’s really their goal. In fact, I doubt that they will raise interest rates in August either.

I have written about Hindenburg omen (H.O.) before  in 2006. Although in 2006 the H.O. signal did generate a 7% decline out of the stock market, it was by no means a “stock market crash." The current Hindenburg omen was triggered on June 6, 2008, and has been confirmed by subsequent repeated H.O. signals. The previous confirmed H.O. was in October of 2007, and stock markets definitely had a serious correction afterwards. The success rate for H.O. is only about 25%, or 1 crash in every 4 signals, and it will last for about 120 days during which it could crash. But if you could avoid those mini-crash period as a buy-and hold investor, you obviously will do so much better.