June 30, 2011

Short-term: 2 green, 2 yellow
Intermediate-term: 2 green, 1 yellow, 1 red
Composite: Neutral and improving

Another strong up day. One of my indicators that doesn’t trigger often went positive yesterday. The last three times it triggered were July 26, 2010 (bullish – a bit of late signal for that rally), Aug 12, 2010 (bearish) and Sept 3, 2010 (bullish – timely signal for the big QE2 rally). Fundamentally, the only reason the markets are going up are because there is a lot of money out there that needs to go somewhere.

As long as you keep in mind that this market has no connection with any underlying reality whatsoever and that it is entirely a consequence of the central bank (all of them – everywhere) attempt to coordinate asset bubbles to prevent recession, then invest. But always know where the exit is. At some point, these jackasses are going to run out of mud and straw – and the downside is going to be catastrophic. But not yet.

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