SATURDAY MORNING POST

REQUIRED READING
http://www.hussmanfunds.com/wmc/wmc061211.htm DR JOHN HUSSMAN
http://www.stockmarketcycles.com/current_observations.htm PETER ELIADES
http://www.safehaven.com/article-6516.htm JOHN MAULDIN
http://www.safehaven.com/article-6515.htm DOUG NOLAND
http://www.safehaven.com/article-6514.htm DR RICHEBACHER

Corrections are short and painless, advance decline line continues to advance, life appears good for the ongoing bull market. As this bull from 2002 lows has exceeded its previous highs, we can consider it a Secular trend, most cyclical bull markets were long since dead.

What has also helped the market is the comeback of the hated weak sister US DOLLAR, mostly because sentiment got too negative, once this works off, new lows are possible.

Interest rates are still LOW historically speaking, and money is easy to obtain, it is possible that the housing sector has temporarally stabilized as some buyers may be inticed to come back into market. Sellers still reluctant to lower prices aggresively, but in ost areas they have stopped going up or have come down slightly, 2nd chance buyers may appear.

HEAVY foreign investment money is still POURING in, money supply has begun to grow again http://research.stlouisfed.org/publications/usfd/page3.pdf but this years growth has been stunted.

Merger and acqusition activity has reached new extremes beyond even 2000 top, there is a LOT of money sloshing about.

Fund managers want extreme bonuses too, so year end performance should remain in bullish control. Early next year we could see some weakness, but not sure it will amount to much, yet.

This may be the first time in market history where a NEW BULL MARKET began near historic extreme valuations, valuations have come down because of record margins and profits also at record levels, but now SPX PE of 18 is getting pricey especially if profit gains slow or regress.

Everything returns to its norm sooner or later, that trip for the stock market will not be a pretty sight, from a BELOW 10 VIX (volatility) there is a TON of FEAR to feed on, but I must say a new BEAR MARKET is nowhere in sight.

A well diversified portfolio must be doing rather well, the question is, when the winds of change DO finally come, are you prepared to make changes?

Question marks, last bull market charge led all to new highs, near the end, the Transports began to fall onths ahead of final top in DOW, then NAZ in March. The SPX is still below its 2000 top, the NAZ 50% below. The Transports have not CONFIRMED the NEW HIGHS in the DOW, according to Dow Theory, these non confirmations have led to MAJOR MARKET TOPS!

So, I am watching the TRansports to see if they can rally to new highs with DOW, the NAZ? not gonna happen. However, the NAZ is VERY close to an area of HUGE resistance, of which a month ago I charted and pointed out if it could "get inside" this area, a SURGE on 100's of points should occur.

I also charted the double tops on Q's near $43.30 once broken could be riden long, a buy near $43.50 on a close above was there and use of $43.25 (just below breakout) would define a well controlled stop loss. We're about a dollar above that now.

FED meeting and OPEX Fri wnet with a whimper, bulls in control UNTIL SERIOUS SELLING PRESSURE arrives.

I will attempt to post every Sat, so check back until then take care

D