LONG IN THE TOOTH

Call me crazy, but a down cycle in the US economy and stock markets is upon us, and if it hasn't begun it could at ANY MOMENT!

WHY? Did I escape out of my straight jacket?

Even Richard Russell, even though energy stocks have gone through the roof is suggesting several ETF'S to enter, and even though Utility stocks have closed near all time highs, and yield scant returns compared to past yields are among his favorite picks.

My complaint with this is, he may be herding the last of lemmings into a sector that is already bursting with bulls!!!! And Ute stocks have soared, partially because of energy and the search for yield pushing investors one sidedly so to the sector.

How do we spot signs of a top of a given item? Sometimes news stories give us a clue and bullish sentiment.

MANY books now coming out calling for "PEAK OIL" and "ENERGY CRISIS" and if you think how hard it would be to predict A) Demand in future and B) Supply and qty of reserves it is a foolhardy task. BUt I believe this is a telltale sign the top is in or near in energy and oil prices.

Bullishness is off the charts and EVERY DIP is being bought. The chart of OIL (symbol $WTIC) shows the top at $55 looking the same as the top at $67 (closing price). MACD looks like a double top and turning down with a hair weaker RSI (relative strength). Use stockcharts.com
to see the 10 yr chart. I am not saying oil couldn'tgo higher, just the table is set for it to do what the herd thinks it couldn't.

Now Cramer is liking GOLD! It has hit mainstream media, and is quite the talk, with 10 day RSI over 81% BULLISH is almost everyone all aboard the gravy gold train?

Gold is a lousy investment, pays no interest, ONLY rises in periods of inflation then falls rapidly like it did from the 70's highs. Long time gold bugs are holding gold at $850 an ounce! from over 20 years ago! what is todays price? near $475 !

Silver is under $7.50 and over 20 years ago it hit $50 !!! is Silver a good investment? The metals are a TRADE, can you go to corner drug store and buy Asprin with gold coins?

I HATE FIAT currency, don't get me wrong, and maybe not a bad idea to hold some gold coins, and buy the stocks LOW, but at some point you will need to convert you metal to a non shiney FIAT to actually buy something. When you have hundred of millions of people use to paying with paper, that is how it is.

Now the smart thing is to hedge by buying stronger paper, like the Canadian fiat or as EWT suggests a "stable currency fund" which is set up to RETAIN your BUYING POWER, now that makes great sense and is now available. IMHO

Short the market? not for everyone, but actually if you just hold CASH and if stocks FALL over the coming years, and you can buy GOOD companies on the cheap at reasonable or below KNOWN prices, you basically have! 100% invested for most will be financial suicide!

Last comment on gold (YES ITS ONLY REAL MONEY) who is asking why gold at 17 yr high and silver cant get above 2004 high of $8.50?? being IGNORED I believe speculators are in gold big time now, so be careful I think volatility could pick up intensely.

The gulf rebuild is going to take MUCH longer than anyone can imagine, and who is sure the entire area isnt now a toxic waste dump? How safe would it be to come back? WHat about all those mortgages? WHO could come back if no schools for children? drinking water or electricity?
And with the NO BID contracts, our tax dollars will go to waste! and abuse!

I am focused on the debt issue. Deflation normally is a factor at play with historic debt afoot. (last time see 1929!)
WE have surpassed the 1930 high of TOTAL CREDIT MARKET DEBT BY 30% !!! And yet the bulls think the FED can just KEEP dishing out the FIAT, and it will just keep piling up on top of the already historic conditions? and give same results as the past?


ALso missing? wage growth present in every recovery from recession is absent from this one, and has helped to take savings down to below ZERO!

NO!!!!!! We are getting less bang for the buck!!! It is obvious from the data. ALL CYCLES come to an end! IF we are already PAST 30% previous 100 year highs in debt and credit inflation how could YOU be complacent about our current environment?

Yet you ARE! the VIX sits near its BUBBLE BULL mkt lows! And the relationship between stock market price and complacency is also obvious

OCT is historically bearish, but who is worried?

The dollar has strengthened somewhat, why do you suppose? It wouldn't be because of inflation.

WHAT sector in market hasn't been played?

There are hints INTEREST RATES are turning up! (all blue words are live links) NORMALLY long term rates follow short term rates, I think GOOD chance that may be finnally happening as this chart implies. 20wk trying to turn up thru 50wk and could provide support below. MACD is rising (MOMO)

Switching to daily chart from weekly we see 20 EMA HAD broken up and both 20 and 50 and now RISING. we also have series of 3 higher lows.

Rising interest rates and debt are characteristics of the onset of DEFLATION, though rates should actually DROP when deflation is in full bloom to try and invigerate economy. BUT we shot that arrow, real estate has EXPLODED beyond any previous BOOM, so that arrow in quiver has been played and so has autos! "you pay what we pay" maybe the signal of end of road.

Bears are actually in this market big time playing it for al its worth LONG! the table is set, and thought I dont know the spark that will light the fuse for an earnest decline to begin, I DO know the powder is bone dry. Be careful.

Duratek