Saturday, February 26, 2011

ACT - Asset Class Total

Money flows from one asset to another, so if we can follow this trail we can make better judgments of the overall market.   At least that is the preliminary theory.  

Then comes leverage, margin, ETF's, futures, and just plain borrowing.   Perhaps we should throw in QE-1 QE-2 although I don't think those actually increase the money supply, they just refinancing the debt coming due and support T-bill prices so that other "private" money is actually forced into riskier assets.   I do think it is that simple.

Well all the funny money, compounding by the all important "Con"fidence, does actually work to float all boats at the same time, and I don't mean just stocks.

Think about it, stocks going up, housing going up, PM going up, Bonds going up.   Does that make any sense?  Well as Dash of Insight proposed last Sunday the 20th before the "correction week" of why the market will go up....because the beat goes on.   Maybe the " 'ol Prof" called the top with this one.
Dash of Insight blog
Although my current thinking is that we are SIMPLY IN AN INDECISION MODE, with the most likely thing that the uptrend continues.

Remember Chuck Prince, still dancing with the stars in his eyes after all these years...

Prince still Dancing

I did in fact call the top on 2-8-2011

Calling the Top (or close enough)
However, a key note -- the bears have not started salivating yet.   Lucy has took the ball away one too many times, and in the endless trickery of the market, this would be the perfect time for a big drop, say on weekend news, so that the bears, waiting for "confirmation" miss a big move, say 10% on Monday and Tuesday, then as they jump in short, the HBB ramps the shit out of the market.   Just saying, one scenario.

This "ACT" is something I need to spend a few hours on and refine.  For now it stands as is.  Declaring complete uncertainty.

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