Reply #26: Seduced, corralled, awaiting the fleecing [View All]

http://www.321gold.com/editorials/maund/maund122004.html

I have been watching the continued advance of the broad stockmarket since the US elections with a kind of morbid fascination. Despite the horrific fundamentals, the market has continued higher, yet, as I already dramatically demonstrated a couple of weeks ago by means of a Dow chart in Euros, this rally is nothing more than a "damp squib" in real money terms. The complacency in this market is truly incredible, given the drop in yields to a pitifully low level, and the fact that the market has risen into an area of truly massive overhead supply that would make even an 8-year old budding chart analyst nervous.

More ominous still is the fact that insiders have been unloading stock onto retail buyers at an ever-expanding rate that has risen to extreme levels in recent weeks. Ordinary investors have been corralled into the pen once again, seduced by slick marketing campaigns and glossy long-winded brochures, and are now helplessly awaiting their fate, which is, of course, to be fleeced.

We will now examine the charts for the broad US stock markets, focusing mainly on the Dow Jones Industrials, because there was a potentially very significant volume development on Friday. I would rather look mostly at the S&P500, which is more representative of the market as a whole, but there is no volume data available for this broader index.

A two-year time period has been selected for our 1st chart, in order to show the run-up from the March 03 low in its entirety and also the toppy action all this year. On this chart we can see that the index broke out from the gentle downtrend channel in force all year, upon the Republican party securing, apparently with the aid of more than a little tweaking of the latest vote counting technology, a clear, if marginal victory in the election in early November. This breakout, however, is regarded as a sucker rally, as it is driving into massive overhead resistance and is accompanied by frenetic insider selling.

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Hate to post and run, but got a lot of errands to do today. Hope to check back later. :hi: