Bookends & The Number 13

Recall the lead-up to Y2K -- the misplaced hysteria, the fear that the world would end precisely at midnight as the world's computers switched from 1999 to 2000.

Nothing happened. The markets breathed a huge sigh of relief and rose to new highs. Then the bell got rung at the top, just when everyone thought it was the all-clear signal.

Now, as we approach December 21, 2012 -- supposedly the Apocalypse predicted by the Maya -- the same things are happening. Saw a tweet this morning from a trader: Things will quicken in the next 7 weeks. #itsnojoke.

Back in 1999, my father, who is an insurance risk management consultant, told me that insurance rates had not risen for Y2K, not for anything. It was the tip off that the entire thing was manufactured hysteria.

The same is true now: insurance rates are not indicating the end of the world on December 22nd. Indeed, the only thing that has been hinted to end was that Coca Cola would not be sold in Bolivia after December 21st, but even that turned out to be a rumor. The Minister For Foreign Affairs only wanted to suggest that people try to align with cosmic changes after the reset of the Maya calendar.

Otherwise, the emergence of bright neon colors and Apple Mania provides useful bookends to the dot com era. Perhaps we'll make it through the election as well as the end date of the Maya calendar and begin the next chapter with another relief rally into January 2013.

Lucky 13 -- 2013 -- could ring another bell. One that Fibonacci might chime in on, 13 being a Fibonacci number. It would make a nice proportion for a top, and would likely catch everyone on the wrong side of the boat once again, thinking that whichever President who has won will make everything OK, and that since the world didn't end, the stock market can keep going up up up because the Fed has fixed it.

My own prediction is that whomever wins the presidency will come to dread it.

Onto the market itself. I did not see enough volume on Friday's decline. The onus is on the bears to follow through, and I'm not seeing it happen at this moment. I could see a bounce, though, and 1425 looks like an ideal spot. Should lower prices come along, 1403.28 and 1396.56 await.  Each swing of this market since 1474.51 tells me that even if lower prices occur, eventually the top will get retested and probably exceeded.

But everything that I've seen since the 2009 lows tells me the "rally" is a mirage built on stimulus and the dope of hope. Therefore I will continue to play both sides.