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For the last several weeks, the market has given indications that it was going to take a run at the old 2007 highs of 14,000+, but every time it would get near the target, there would be a several hundred point sell-off, followed by a mediocre up day, and then another several hundred points to the downside the next. So what triggered this final run to the roses that broke through the resistance and then kept going for at least another day, setting an all time record high of 14,296.24 on the DOW and 1541.46 on the S&P 500? Perhaps it is telling that there was no champagne or confetti that day, and traders, analysts, and market makers continue to be more and more cautious and jittery the higher the market numbers reach.
Some analysts have attributed the rise in the stock market to the stronger dollar in the last month, making the market a safe haven; others contributed it to the weaker dollar earlier, making it more advantageous for foreign investors to invest, once again making it a safe haven.
Earnings for the fourth quarter were not especially sterling for most companies, as most missed the “Street’s Estimates” (though many did come within a slight percent of the stated targets). In addition, job numbers did not improve substantially, as people have come to realize that the numbers the government releases are penciled in. California has failed to report two months of figures, but even though those numbers were missing, the employment figures were released, showing a large drop in the number of unemployed when, in fact, that was NOT the case. This was the cause for some of the seesawing in the market’s numbers, because analysts and traders, especially technical traders, tried to make adjustments before any more prognosticating.
The precious metals market has been almost as indecisive. One thing that has happened is that the gold/platinum price inverse has been reversed. Platinum is thirty times more rare than gold and has technological applications as well, so the inverse was very odd. Platinum usually trades at a premium to gold, selling for $200 to $300 more an ounce; however, it lost more value and was trading at $200 to $280 an ounce less than gold. Finally, after struggling for weeks, platinum regained its superior position by $70 dollars an ounce, but as of Wednesday, March 6, 2013, it was only still higher by one dollar, as gold had advanced and platinum had dropped. In addition, both metals had dropped drastically earlier and then seen days they advanced more than $20 an ounce each.
The Federal Reserve announced it would release the results of the Big Bank Stress Tests over a two-week period, rather than all in one day as it did last year. Why would they want to extend the stress and the unknown (which is seldom good for the market numbers), keeping investors on the sidelines when they might otherwise jump in? There is much cash on the sidelines waiting to be invested, as soon as those with it feel comfortable in doing so. Without a clear picture of what is facing their investment, few will throw good dollars after bad, because with inflation, even at these market levels, the wealth is not the same as it was with the 2007 highs.
Recently, the head of the Royal Bank of Scotland, announced that it would behoove the Central Bank to be broken up and the bad assets sold off so that the remaining assets would be properly capitalized and the 82 percent public ownership granted would be healthier. Nothing of the sort would ever become of our central bank, the Federal Reserve, as the ownership of it is so secret. As most of us have come to understand, the Federal Reserve, especially with its quantitative easing (printing money out of thin air, loaning it to the Treasury, and charging interest to the tax-payers), is responsible for the trillions of dollars worth of debt that we find ourselves in as a country. Without that, there would be no way to finance the out-of-control spending that Congress has allowed the president to continue at his pleasure.
It has been my experience that markets fall at approximately three times the speed at which they rise. I am expecting the upward mobility to continue for several more weeks (with some triple digit down days thrown in) as the euphoria continues to be contagious to outside investors. Once the support level at 14,000 is broken and cannot be bridged again, I would look for the market to begin selling off quite rapidly (though there will be some up days mixed in as well). Long-term investors might get financially decimated as they did in 2009, and I would not like to tie any amount of principal up for any substantial length of time, nor would I want to be a buyer of bonds, especially Treasuries. Many of the top analysts, such as Celente, Schiff, Rogers, and others of that ilk are still expecting a market meltdown in 2013 and a rise in precious metals. I tend to agree. Just because there is a temporary rise in the market does not mean we can afford to be careless.
©2013 Off the Grid News