Why not? This is some cool place!

By Dan Frishberg

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There is no such thing as the market. The stock market is a daily meeting of people. Often those people act in a way where watching them from the air allows us to know what their posture is.

We have a discipline, and it is to deal with what actually is, NOT GET STUCK TRYING TO CONFIRM WHAT WE EXPECT. We have the same craving for congruence as you and everyone else, but we know our cravings don’t make us money.

We also know lots of people look to us to analyze the market action, because we’ve often been accurate in the past.

The discipline is this: The way to be accurate is to make bold pronouncements when you can see clearly what is happening, and we can often see clearly what IS.

Right now, there is a battle going on. Demand is still eroding. At the end of December, more than 90% of stocks were above their 10 day moving average. Now that number has fallen to 60%. In other words, people are becoming more selective about what they are willing to take risk on. Prices rise because investors feel more desire to assume risk, and this shows up when the number of advancing issues – stocks being bought – is on the rise. Right now, that isn’t happening.

The pendulum of moods is also all the way at the top of its swing, so this is a pretty risk y place to be trying to jump on.

Still, you can’t ignore the fact that when the markets try to swing back down, buyers keep arriving to interrupt the swing down. Bottom line: I see the signs of distribution, but I also see strength and I know this is an election year coming. I can also see no sign that this strength is being caused by Fed action, because the money supply – the monetary base,  that is directly manipulated by the Fed has been going down, not up. There is much more the Fed can do, and they will do as the election year goes on.

So, investors have to decide if you think the default place for your money is in the markets, like in the ‘90s  or whether your money belongs in your pocket until you have a real reason to believe you will be well paid for taking risk. Today, my listeners want certainty, and the indicators are pretty balanced. Not what you want to hear, but that’s how it is.

I am not bothered, because after half a century, I’m confident this is all going to become clear. But profitable rallies don’t really start from the point we are at now. For me, I am patient, waiting for the high percentage entry point. This isn’t it, but I have to give it to that Mr. Market. For an underdog, he is holding up pretty well.

And by the way, markets… Continue reading →