SPINNING WHEELS

*click to enlarge For nearly 2 years the Dow has gone literally nowhere, and isnt even above it's 2004 highs! What is going on? I think the Dow has already topped in this cyclical bull, a correction of the greater Bear Market trend which is correcting over 20 years of "good times".

Let's see what this rally to correct recent decline can do, where it tops. We still don't a single bearish plurality in the IIAA poll as yet, the bullish string goes unbroken.

Lots of bullish ammo has been spent, This from the Current Credit bubble bulletin from Doug Noland:

Broad money supply (M3) surged $41.7 billion, surpassing $10 Trillion (week of October 3) for the first time. M3 has now doubled in less than nine years, after reaching $5 Trillion during the first week of 1997.

Yet as I showed a few posts ago, the adjusted monetary base for the most recent week declined sharply:
http://research.stlouisfed.org/publications/usfd/page3.pdf

An interesting development, which I am attempting to understand and wonder if the monetary base isn't affected by real estate activity........but we do have an explosion in money supply yet the aggregate as I show declining sharply.

If market sees oil dropping (if it gets below $60) and says this is bullish, it can only come from expanding supplies and WANING demand......which has been published as such.

Wait, what?? waning demand? slowing consumption? How could that be? Why the only thing that would cause that would be a weakening economy.

That's what the data piints to my friends, weakneing housing stocks and finacials, recent weakness in some commodities and coal stocks. Weak COF stock and an expanding list of stocks hitting fresh 52 week lows.

IMHO this is the OPENING BARAGE of PHASE II of the BEar Market, brush up on your hsitory and see how ALL the other bear markets ended.

Now if you saw the incredable amounts of fresh money our crisis driven Fed has printed, and match that up with last weeks plummeting adjusted monetary base.......2 plus 2 are not equaling 4.

I find the action in the bond pits unsettling as well, the yield RISNG instead of falling during recent strong selloff.

Duratek