Wednesday, December 24, 2014

Up, Up, Here We Go?

"Up, up, here we go, go! Where we stop nobody knows"

Honestly, I think this is freaking insane. 1000 DOW points in 5 trading days. It's ridiculous. It's not the fact that the DOW is up a mere 5.88% that bothers me, it's the fact that it's up 5.88% in a week.

No pullback, very little basing before subsequent take-offs. This is a trend follower's wet dream.

To me, this is ridiculous. At this trajectory, the DOW will be 351,000 at the end of next year. Too much exaggeration? Okay, how about 22,000 DOW end of January? Or how about 19,000 end of next week?

We've gone too far, too fast. I vote that we need one of them "healthy corrections" soon.

These kind of explosive rallies are only seen at 2 points. The end of bear markets when the smart money pours in, and the end of bull markets when the retail investors pour in. (a.k.a. euphoria)

Then again, we did have a 5.1% drop earlier this month. So I suppose in today's centrally planned market, that was considered a bear market that we are recovering from.

I'm not saying it can't go higher, but I'll be damned if we do. Like literally. Jesse Felder makes an excellent case for some downside given the huge divergences with all areas of the bond market. A good read with some light touches on energy too.

Anyway, I'm signing off with a timeless nugget of investing wisdom:
You should always become more skeptical of any investment that has recently soared in price, and you should always become more enthusiastic about any asset that has recently fallen in price. - Jason Zweig

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