The collision of global markets and social mood

Tuesday, January 22, 2013

Content, Context, And Trees

Found some interesting stuff in a print version of the Wall Street Journal from last week.

Crude and gasoline inventories are running higher than the 5-year average, while crude and gasoline imports are below the 5-year average. True, we are producing more here in America. But weekly demand is down too. The 5-year average is 19.1 million barrels per day while current demand is 17.9 million, down 6.28%.

Moving to real estate, which everyone is convinced has turned the corner for good, an interesting pronouncement of such bullishness was made in a full-page print ad for Studley which I gather is a privately held commercial real estate firm based in Manhattan. They informed the world WE JUST KEEP GROWING.

And in fashion, the bifurcation addressed in The Socionomic Implications Of September Vogue: 2012 is in full swing. WSJ style editors noted the trend of transparent clothing, commenting on its "sheer daring." Another sub-head noted "the many moods of transparency."

Contrast this with The Anti-Surveillance Clothing Line That Promises To Thwart Cell Tracking and Drones. This is a nod to CONCEALMENT which was flagged as a socionomic trend in the 2011 version of The Socionomic Implications Of September Vogue.

Then I saw an entirely new government role proudly reported on Bloomberg: Government As Equalizer. Cringe.

Meanwhile, in Davos at the World Economic Forum, the un-elected leaders of the world quietly decided that it would be best if $14 trillion was raised each year for "green" initiatives. You can bet it will come from us little people in the form of taxes. They would like it if those "taxes" were paid to the UN, resulting in the first of many further global taxes that supersede national sovereignty.

Turning finally to the markets, I have another slightly higher Fibonacci extension target on the S&P 500 at 1492.76. Last week's 1475.81 low is a key area. I continue to see upside until this is broken. Futures broke pretty hard last night but have recovered somewhat. Below 1475.81 could open the door to a deeper correction, but I would still look to be a buyer as long as 1400 holds.

Ran across a USA Today article posted on Stocktwits this weekend: Why Does This Bull Market Get No Respect?

It started with:

You'd think that a bull market that's posted gains of 119% since March 2009 would get investors a little excited. You'd be wrong.

Two problems. One, what if it's not a bull market? What if it's a very large corrective pattern from 2000? Two, what if it has gotten investors -- actually, the professionals -- very excited?

The writer used a lot of quotes from Wall Street types, but failed to cite any data. He failed to cite put/call ratios, trader sentiment as measured by, Daily Sentiment Index, AAII, Commitment of Traders reports, etc. all of which have shown elevated levels of sentiment at differing times from 2010 to the present.

Instead the article served up quotes such as: "With two 50% haircuts in the last 12 years, investors think it is just a matter of time before we get the next 50% drop. So they have just given up."

Traders who read and believe such things may be right for a while. Indeed, I continue to see higher prices coming. But what can get lost is the context in which these prices are occurring. Context helps us recognize the trees in the forest. Trees are very dense and hurt when you bump into them.

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