The general market (summarized here with the S&P500 ETF) has had a powerful up trend the past eight months. A peculiarity of it is the major trendline connecting the price action in March, July and early October.  To make it to new high ground (toward “Point A“), the market will have to pass through not only the natural doubting resistance of new highs but also up through the strong trendline.

Failure to press through toward “Point A” possibly sets us up for a head and shoulders reversal.

Linked here is an extraordinarily interesting CSPAN commentary & Q&A with Janet Tavakoli.

Did the Fed pass out regulatory “Get out of the doghouse FREE” cards to banks today, or imply that workouts are up the banks and the Fed won’t help?

Is this related to investor whale Wilbur Ross warning today against the beginning of a “huge” crash in commercial real estate (CRE)?

Cash for Clunkers costs taxpayers $24,000 per car .

CNN breathlessly reports that this “stimulus” program added to GDP.  Why, if it were that simple, we could just borrow and spend our way into prosperity forever.

Uh oh.  What if the world really doesn’t work that way?

The character of the market this fall has been for the uptrend to fall under pressure, but inch up into newer highs. Once it makes new highs for the move, the rally – by definition – has resumed again. The sloppy action among the market leaders and the weight of the many distribution days has been too much and the market is now in a correction.

Remember, a ‘correction‘ can last a few days or a few months. Be patient. Read & research.  Build the watch list.

“Corrections”  don’t mean the market will plunge 60% in the next week. It’ll take six months. Just kidding!   Given that IBD research has shown that 3/4 of stocks follow the general trend, it will likely be difficult to make headway in your stock or mutual fund investments against the downtrend.  I understand that sounds like I’m saying, “You’re going to get wet when it’s raining.”  Instead I’m encouraging you to plan your next picnic when it’s raining so you’re ready to go when it stops raining.

Oh, to be free enough in time and money to attend a bona fide economics conference; such are the dreams of nerds. As the Austrian School economists congregate in Spain, we can only tune in via blog updates from the dapper Jeffrey Tucker.

The second full day in Salamanca – by Jeffrey Tucker

Here was a nugget from a presenter, a businessman from London. “…As he was attempting to transact business in Iceland, he recalled very well correspondence with the Iceland central bank. He asked whether he can send Euros in a business deal. They wrote back “no, we are in danger of going bust.” He praised the bank for being honest, and keeps the email as a historic memento.”

Despite the relatively high number of days of institutional selling (signified by stock indexes down in price on higher volume) we should recognize that the market’s uptrend has resumed.

The bears have lots of reasons, but no one can argue with the tape (for too long, anyway.)

UPDATE: the sentence above seemed cryptic upon re-reading, so premit me to elaborate a bit.  We’re still facing several days of distribution in the past few weeks, so it wouldn’t take but a day or two of terrible action to again raise the “Yellow-Caution” flag on the market.   The DeMark indicators – a technical voodoo I don’t follow too closely – still shows meaningful ‘tops’ are in place for the S&P500 as well as some foreign currencies.  The English (& loose) translation is that any “Green light” means proceed with caution.

UPDATE: Oct. 28:  The character of the market this fall has been for the uptrend to fall under pressure, but inch up into newer highs. Once it makes new highs for the move, the rally – by definition – has resumed again. The sloppy action among the market leaders and the weight of the many distribution days has been too much and the market is now in a correction.

Remember, a ‘correction‘ can last a few days or a few months. Be patient. Read & research.  Build the watch list.

This video interview of a soda pop emporium owner is very infectious.

The link below is a very fair explanation of why flash trading is plainly not fair dealing with the public and how this horrendous practice costs Joe & Mary Lunchbucket billions by the penny.

http://www.zerohedge.com/article/themis-trading

“Yesterday I was at my favorite local supermarket buying a large bag of dog chow for my loyal pet, Biscuit, the Wonder Dog and was in the checkout line when woman behind me asked if I had a dog.

“What did she think I had, an elephant?

“Well, since I’m retired and have little to do, on impulse I told her that no, I didn’t have a dog, I was starting the Dog Chow Diet again. I told her that it was essentially a perfect diet and that the way that it works is to load your pants pockets with chow nuggets and simply eat one or two every time you feel hungry. The food is nutritionally complete so it works well and I was going to try it again.

“I added that I probably shouldn’t, because I ended up in the hospital last time, but that I’d lost 50 pounds before I awakened in an intensive care ward with tubes coming out of most of my orifices and IVs in both arms.

“(I have to mention here that practically everyone in line was now enthralled with my story.)

“Horrified, she asked if I ended up in intensive care because the dog food poisoned me.

“I told her no, I stepped off a curb to sniff an Irish Setter’s butt and a car hit us both.”

h/t:  Backwoods Home Magazine