WEEKEND COMMENTARY " WHERE ARE WE?"

What a wild few weeks? The most intense selling registered since the 1940's, followed by a jubilent rebound rally cut short with Friday's losses. Did the rebound from the NEW LOWS appear because of a deal in Europe, Greece news, jobs, consumer spending, or just oversold bounce?

Because of the change in trend that appears to be in place from the April highs, with NO signs of ACCUMULATION but only of DISTRIBUTION.....it is more likely any rebound is just a reaction to the new primary trend decline than a new bull mkt, IMHO

Stocks have risen because sentiment got too bearish, oversold condition, and there is always ebb and flow, but I had posted an article entitled "Bear MKT rules apply" and so if we look at what is going on keeping in mind the primary trend has chaned to DOWN.....that changes things.

We could have begun a protracted fall rally, we usually get one into XMAS...the fabled "Santa Rally".....players position for this, and doing it EARLY when sentiment is LOW, is a good way to make good returns....then when the late comers, as they always do hop on, they will sell out their positions leaving thenew comers to take the hit...AGAIN.

Nat GAs may be a play with weather turning soon....lots to think about. End of 3rd year of Pres cycle, 3rd years usually positive for market. I see 2012 possibly a tough year.

With the 50 day moving avg below the 200, I have always found this good indicator to be more cautious and defensive. Selling intensity has swamped the buyers, and last weeks rally did not see sellers pull back much to indicate they are done.

We still have persistent unemployed at 9.1% "officially", we know it is much higher....can companies continue to SURPRISE to the upside in earnings? How many companies like NFLX were buying their stock back at HUGELY INFLATED PRICES?

The current climate has proven to be VERY stubborn and none of the fixes tried have been effective. Current FED policy is KILLING SAVERS and is an attempt to leave NOWHERE xcept stock mkt as a place to find returns....such a long lasting one sided approach....may have unintended disastrous consequences when THAT BURSTS...like a gallup higher in interest rates.....let's hope that doesn't happen....but all bull runs do end...even falling rates (since Volker attacked inflation)

"Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.^[12]
Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981. The prime rate rose to 21.5% in 1981 as well.



As you can see....since 1981 then interest rates have been in a FALLING TREND 30 YEARS!!!

Duratek