YOU CAN BANK ON IT

A SMALL BANK WILL CLOSE NEAR YOU

Some measures of buying momentum peaked 7 months ago! But the market trudges higher. WHat we are witnessing is a VERY narrow focussed market, selective buying that is rising in the absence of selling interest. (note VIX is near lows for the rally)

We have had ONE 10% corrective decline from the March lows. Financials are stuck in trading range that topped in AUG. Measures of volume have been decreasing for months with the rally.

From Lowry's I think I can share one observation, a measure they use for buying power has not made a new high since APril/May. SO as you can see for yourself, prices can rise with JUST the absence of sellers.

When you think of what made prices fall to their lows in MArch, one could make good argument we have seen a potential generational low. WHAT MORE FEAR than a total financial collapse could cause prices to visit that area again?

IMHO, the potential is not great for that to happen, I don't know the limits of gov and fed intervention. What I do know is EVERY time this has happened it ends badly and the back drop of debt overhang and excess consumption, ability of consumer to borrow and gear up consumption have been mortally damaged.

Small Banks do large portion of lending to small business, they no longer are competitive to the BIGGER TO FAIL BANKS, do not have access to the free money as they do, do not make most of their money trading the stock market.

Home Owners drained their home equity like Dracula a victim, left is an empty husk of a corpse.

AT the same time, the taxpayer has gotten more conservative, trying to heal doesn't mean taking risks in the stock market. IN RETURN for this new hunker down behavior, he is rewarded for savings with a NEAR ZERO RETURN ON HIS MONEY. MY BIG ARGUEMENT is the FED need to RAISE interest rates, this is rediculous, there is NO proof this plan is working, and just imagine what SAVERS might do with DECENT RETURNS on SAVINGS?

We can find growth, but the fuel has been spent, bills piling SKY HIGH and IMHO the NEW GROWTH, the NEW REALITY doesn't justify stock prices at these levels.

Duratek