I write this on the eve of Christmas eve, and also the eve of the historic and disastrous bought off senate vote on obamacare. The public does not what this awful bill to pass. Many of the democrats don’t even want it. But comrade Harry Reid is intent on getting something through the senate. On the bright side there will most likely be a backlash and hopefully a large turnover in the 2010 mid-term elections. I’d rather they throw all the bums out, in both parties, and just start over. I once tried to restore a somewhat rare Italian car that was a real mess. It seemed no matter how much money I threw at it and how much time I spent, there were just too many problems to sort out. The car was never correct. I finally dumped it and got another car that was much more sound, and the restoration was much more easily accomplished and much less costly. So I say throw them all out, both parties, in both the house and the senate, and start over. With nearly three hundred million people living in the United States it is truly amazing that we voted in 535 of the most inept to run our country. I still say we should have some kind of simple test to grant people a voting license. Something simple like not thinking the capitol of the US is Las Vegas, like one person answered on Jay Leno’s Jaywalking segment. I’m quite certain that person voted a straight democrat ticket. That would change with a simple test.
The stock market seems unconcerned about the health care bill, and if passed, the soon to follow and equally insidious cap-and-tax bill. The market seems to resist all attempts at a meaningful correction. But it does seem that the pattern of impulse higher and then pullback to the moving average, followed by another very symmetrical impulse higher has changed. The impulses seem to have dissipated and the market, at least the S&P 500, seems to be marking time by chopping around in a sideways trend, although with a somewhat bullish bias, as pullbacks so far are quickly bought up. The Nasdaq had been displaying similar characteristics, but has broken out to the upside over the last three sessions to make new recent highs. However, there are many divergences starting to develop. The financial index is trending lower. Oil and some commodity names that had been leading look like they are rolling over, but industrial metals are moving higher. And the dollar, which had been moving contrary to the S&P, is now moving higher to fill in the gap from last September. With the divergences and some loss of upward momentum in the S&P, it will be interesting to see if a correction can get started next month. It is overdue. Stocks may be priced ahead of the fundamental backdrop. We’ll see.
I had been warning of a blow-off in the gold market for some time. This market has come down substantially in recent sessions. The trend on the daily chart has turned down, however prices are now sitting on some minor support at the previous peaks of last October. Many chartists put some significance in these levels, so they can become self-fulfilling. These swing points often do create levels for prices to test. There have not been any other pivots or swing point to measure against during the last impulse higher. My fear during that last impulse was that the trend would go exponential, creating a final blow-off to the entire bull market. But the uptrend stopped short of that, and this pullback has been orderly and should be seen as a healthy event for further upside progress in the future. I don’t have a clue, nor does anyone else, if this support will hold. There are several more areas of possible support under this level by viewing the longer term charts. It would take a substantial move lower to put the longer term bull market in jeopardy, in my opinion. But it might be some time before the daily trend puts in another leg to new highs. Of course anything can happen with this reckless government and out of control spending. I think these market are factoring in the falling poll numbers and possibly looking ahead to the 2010 elections. If there is a big change in the makeup of congress it may help to at least create some sort of gridlock that could help block some of Obama’s extreme radical agenda. But congress will still be populated by mental midgets with no ethics or standards. I still say throw all the bums out.