Tuesday 4 January 2011
We have not commented on this market since 21 December simply
because we are not fans of the blatant manipulation sponsored by
the Federal Reserve through its Permanent Open Market Operations,
POMO. A greater truth to the market condition is found in the
knowledge that mutual funds have experienced 33 straight weeks of
withdrawals. Obviously, even the public has no confidence in the
The last seven trading days in December show a market lacking
total direction with small ranges and even smaller volume. We
expected price to work higher, for there has been zero willingness on
the part of sellers to enter this market on the short side. Most
everyone knows what has been going on, and who wants to go up
against the deep-pockets of the fiat printing machine?
It did not, and does not matter, at least to us, how high this market
goes, it has left the realm of technical reality due to the artificial
ramping up of prices, and we will not abandon sound analysis in
favor of what is going on.
Monday's post-holiday trade saw a sharp increase in volume, seen on the chart. Price vaulted to new highs, but there was evidence of
selling at the highs, more profit-taking than anything else. For that
reason, we do not view the S&P as having topped, yet.
1288 to 1300 is a price target. Unless the market sells off and closes
under the 1254 area from here, and that would seriously change the
picture, it looks like there may be more of the same, a creeping market.
Just not for us.