The bears are coming up on some serious PAYBACK…
As admitted before, I was early on my bullish call by 10% or so. Even so I’m more bullish now than I’ve ever been. While I know it’s rare to see this I won’t change my forecast simply because it’s gotten to the point where it’s easier to do so. I made the bullish forecast statement and with an open mind I stand firm. There has been nothing new that would justify a change of my view. I’m going to lay out the reasoning in support of my decision again and as often as I have to to reaffirm my views.
- There’s hundreds of billions (if not trillions) on the sidelines begging to be put in the game once the game doesn’t look so bleak
- The VIX has been at elevated levels for an extended period of time (see HERE for an article and below for a chart)
- Governments across the globe have been pumping money into the financial markets to boost liquidity as never seen before (we’re talking trillions people)
- Commodity prices (input prices) have come down drastically which makes it cheaper for firms to produce while widening profit margins
- Investors/Large Fund Managers have gone into cash… they’ve thrown in the towel for 2008. I suspect it’s because they’d rather close down shop and reopen with a fresh high water mark in 2009. Doesn’t make sense to start off 2009 at -30% when you won’t earn money until you exceed the difference and then some. When 2009 begins watch as everyone reopens positions so they #1- can invest their funds and #2-don’t miss the boat.
- Fear remains but it has transitioned into ‘giving up’ recently. When everyone starts to give up it means they’ve entered the final stage of the Bubble process – DESPAIR. See the chart directly below for further insight. This to me is the best sign… all the stock market truly is is the collective flow of personal sentiments. If you can frontrun the sentiment flows you will win. When there’s few if any high quality forward-looking reasons that are good enough to justify the risk of putting further negative pressure on the markets then we get an inverted slingshot effect. Especially when we’ve enjoyed three significant, consecutive months of sell offs.
While there’s plenty of trouble for the economy going forward I don’t see it causing the detriment of the financial markets. The main risks I see are the government screwing up or a Black Swan event. Other than that ISYN believes the game is about to be played and if you’re on the bench looking at the grass or the girls you’re going to miss some of the victory.
VIX
S&P 500
