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Flat is As Flat Does


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From page 203 of Martin Armstrong's book..........

 

March 1929, 6 months before the parabolic rise into the September top.

"During the last hours of March, the call money rate jumped to a new record high of 14%. Bonds collapsed violently. March had brought sheer devastation to the bond market. Some of the favorite speculative stocks were hit hard. Call money rates continued to climb, and casualties mounted, as some investors were forced into liquidation. But by the end of the day, many stocks rallied sharply, even with the call money rate at 20% as shorts bailed out"

 

"The shorts, made up of "professional" traders, had been convinced that they had picked the top and the ranting of the Fed would break the market sooner rather than later. But as the trading approached the final hour, the stock market rallied again with a vengeance. Pure panic showed in the pale white faces of the professionals as they ran for cover."

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Mark is right. History is replete with examples of markets surging higher for months after the problems became well known and well publicized, such as the US market from March-October 1929. And we all remember that after the Naz got fried in April 2000, the broad market went back up to retest the highs in September.

 

This market is no different. The clock is ticking. I am overwhelmingly long in the WSE Pro chart picks, weighted in energy and tech, but with one eye on the clock, one eye on the charts, and a finger on the trigger. This is one move I would not want to overstay. It's also a move that is likely to be selective, leaving a large number of groups and stocks behind.

 

The utilities appear to be in the end stage blowoff of a mania that has lasted for years. Enjoy it while it lasts. These stocks along with REITs will be the best shorts when this ends.

 

Five months and counting.

 

The weekend WSE Pro market update is posted.

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