DOOMSDAY OR NEW DAY?

I have seen a lot in my investing years, I have not seen anything like I have seen during this bull phase. Let us take a closer look.

From 2002 lows market is up around 5,000 points! New highs in MOST of the indexes except the NAZ which lags badly. New highs in Dow , Transports, Utilities and others, new highs appear a forgone conclusion for the SPX.

A recent poll by AAII had respondants rather Bearish??!!!! around 54% compared to 24% Bulls!!??? does this make any sense with market making new highs every day? Is this the contrarian stuff which allows this market to reach higher ground than almost anyone thought possible? The occurance of such a reading while the market plows ahead is quite extroadinary.

FED has blown one bubble into another, while holding interest rates down to historic low of 1% for a year it finally took hold and the animal juices took off, yes after 2 years of rate cuts "don't fight the FED" came true. BOOMING housing led to across the board spending and the economy took off, corporate profits began to set records.

Home owner used thier homes as ATM machines and took out BILLIONS and consumed which fed the economy even more. Rising home values led to record HELOC'S and refi's never seen before. Some cashed out and sold their homes and then plowed that into market.

This led to RAMPANT CONDO etc real estate specualtion which drove prices artifically through the roof. Which led finally to lending money to anyone who could stand, we got the sub prime debacle which has and will lead to much pain.

Many are now CAUGHT upside down on their mortgages, having wither paid too much or extracted more than house is now presently worth, hard to tell as lenders STIFFEN lending criteria and make it harder to get a loan, harder to sell. Near record home inventory still gluts market, it is a buyers market. I think this is still in early stages as many feel worst is over.

ALL you see around you is ASSET inflation, nothing more, our manufacturing base destroyed by cheap Asian labor, mostly low paying jobs being added the US is not in a good position to compete globally. Watch OIL and GOLD if commodities begin to FALL would be warning sign that global liquidity could be drying up.

In last 5 years the hedge funds have become strongest force in markets, they are now borrowing 2.5X their assets to invest in markets, this is unprecedented.

Yields on the UTES and SPX dividends are near record LOWS, this is what you usually see at a MAJOR MARKET TOP not a BOTTOM!!! The SPX low yields near 2.2% (tops under 3% !!!) have existed for a few years running, so yes it is not easy to call a top, not all components are in place.

Are we at another 1998? or closer to another 2000? No one can know, but when one considers how we got HERE, it gives some indication of what will get unwound and IMHO will become a global meltdown at some point.

Duratek