MARKET WRAP for 12/6/2004

Frist off, my silent readers (hey it's OK to contact me through my email listed.....give me feedback, what you like or don't like, what you'd like to see me add etc).......I will try to write something every MOnday and Friday after the close. Any other day I see something worthwhile I will try to post, so odd days just come back and check.

I noticed today theNYSE volume lagging the NAZ by a wude margin as well as its own recent volume levels. NYSE traded around 1.3 B shares and the NAZ around 2.1 B

AGAIN, the DOW is the weak sister, ending down about 40 points with the NAZ up around 3. The Transports lost aorund 15 points today, still withing 30-40 points of all time highs.

Nobody gives this divergence any press, but we will. The market is strongest if the Dow and Trannies move together, when one opposes the other, we must give that some weight. And the Dow has lagged the trannies and other indexes all of 2004! And we MUST ask WHY?

One reason could be that what is getting carted around the trucks and shipping channels isn't made here, how about a made in China stIcker on it, good chance?

THE TRANSPORTS MAKING NEW HIGHS AS THE DOW DOES NOT IS CONSIDERED A "DOW THEORY" NON CONFIRMATION AND CARRIES GREAT WEIGHT. The foremost author of Dow Theory is Richard Russell and his Dow Theory Letters,at 80 yrs old, he hasn't lost a step, an amazing man I admire greatly, and I continue to learn from.

At this time nearing end of 2004 and beginning of 2005 is where do we stand, what do we know, what can we expect.

Many think 2005 will be great year as NO year ending in 5 has been a down year, however, there is no statistical evidence to give it any meaning, it is just a fact. I might try and explore this phenom at a later date.

WE look to be long the market when values are to be had.But with SPX earnings near 20, Transports near 90, and NAZ near 40, bargains are HARD to find.

You make money when you buy low and sell high, you ROLL the dice when you buy high and HOPE to sell higher, which is exactly what is happening now!

The market is run by 6000 to 10,000 hdege funds,there aren't that many good managers out there, and now these big players,call them LARGE SPECULATORS are near RECORD LONG POSITIONS....a contrary indicator.

10 DAY Daily Sentiment Index is at RECORD HIGH, 52 WEEK Moving Average of AAII Investors Poll just hit a record high ABOVE 50% bulls, second time , last time was in 2000! but this time it was a record high! and it is now declining as what we want to see as signal trouble may be ahead.

WHILE Walmart GM GE INTC etc stagnate, stock likes TZOO TASR and friends SOAR! The soldiers are leading the generals, spells trouble to me.

DO I know when? WHO can? But I do know what SHOULD be place early in a bull market is GONE. What was IN PLACE at TOP of the great bull market has in MANY WAYS been surpassed!

SO this is telling me the SWEET SPOT is gone. If I were long stocks, I would have some kind of protective stops under my prices to PRESRVE profits, if you have them.

With record bullishness towards the metals, and record bearishness towards the dollar, even a novice would suspect a trend reversal to be in the near term offing. NO ONE wants the dollar, can't stand the sight of it, time for a rally, IMHO.

You have end of year bullishness, and seasonal positive present, and I think it has helped digest some bad news.

Job creation a ONE MONTH WONDER! I figured when you took out previous months 97,000 PART TIMERS (holiday hires) and the 70,000 hires in Fla. for huricane clean up, a potential was for a LIGHT number, a MISS.

The "experts" were expecting at LEAST 220,000! We got 112,000 !! Previous month was 337,000 and LIT the fuse of current rally led IMHO.

Folks, silent readers, fans or stalkers, it is all smoke and mirrors BS! The man behind the curtain is a fraud and has small .......mind.

DO stocks do well in an inflationary environment? in a rising interes trate environment? Nooot bloody likely,

Rampant speculation in the cheap stuff, stodgey old Dow 30 like the ugly sister.

MONEY SUPPLY FLAT since AUGUST!
LEI declining in last 5 readings. (leading economic indicators)
NO WAGE GROWTH
OVER CAPACITY
HIGHER PRICES FOR THINGS
HELP WANTED INDEX still near 2001 lows.
TOTAL CREDIT MARKET DEBT AT HISTORIC HIGHS 300% OF GDP.

In a nut shell, we go from periods (long time frames, in the 10's of years) of CREDIT EXPANSION, we PEAK somewhere, then we go to CREDIT CONTRACTION.

We have NO SAVINGS. We have record deficits, and trade imbalances.

WE BORROW 80-90% of the WORLD'S SAVINGS.

Foreignor's OWN over 50% of our DEBT!

WE need 42 BILLION a DAY coming in to fund our gluttony.

THIS my friends....my fine furry friends, is NOT the back drop, to a NEW GREAT BULL MARKET, which is being sold to you by CNBC and Wall Street.

Please, be careful. ALLof course IMHO. *(see my standard disclaimer where Iwarn you I am crazy and don't have any idea of what I am saying.....and advise not listening to me)

What I DO advise? Challenge yourself, to think, to question the status quo, if I can spark that with anything I might post or say, then I have done my job.

Duratek