Sunday, December 20, 2009


A true secular bull market should be characterized by expanding volume as more and more investors jump on board. If not expanding at least steady volume. In the next series of charts you can see that the cyclical bull from `02 to `07 followed this pattern.

You can also see in all these charts except the last one that this cyclical bull is not behaving like a true bull market should. In every case volume has been shrinking as the bull progresses. In every case the 60 week exponential moving average of volume has turned down.

None of these are in true secular bull markets and I dare say this cyclical bull is walking on thin ice. I really doubt we will see more than 3 legs up this time and it certainly won't last anywhere near as long as the last cyclical bull. I have my doubts it will even make it past 2010, probably not even past the middle of the year if inflation explodes like I think it will early next year.

There is one and only one secular bull market left. It's the one market where the fundamentals are not only still intact but improving every day as governments around the world try to again produce prosperity with the printing press. I dare say it's never worked in history and it's not going to work this time either.

I'm just baffled by the fact that supposedly intelligent people in governments around the world can't take the time to pick up and read a history book.

I'm dumbfounded that policy makers can't comprehend the fact that the exact same policies they are pursuing now are the ones that caused the implosion of the global financial system and put us into the worst recession since the thirties.

If too much spending and too much debt are what got us into this how can any sane grown up think that more spending and more debt are going to get us out? Albert Einstein said the definition of insanity is doing the same thing over and over expecting to get a different result. I guess by that definition the Fed must be insane.

We are pursuing the same policies that Roosevelt followed in the 30's that turned what should have been just a nasty 2-3 year recession into the Great Depression. If we don't stop and change course quickly we are going to get the same result he did and the same result Japan did when they went down this path.

We've already lost one decade in the stock market do we really want to lose another or two or three?

Oh by the way, here is the only remaining secular bull market.