Back to New Highs

Im as surprised as anyone, but here we go

Just that look like a market was ready to crash, my favourite indicator started to flash major buy signals - Leading Economic Indicators, AAII All-Bulls percent, a major proprietary indicator using options volume and open interest. For two weeks we've been waiting for the Drop Terminus signal to flash, an indicator that really gives a signal and uses various inputs, but when it's signals it's almost always at a major bottom. Well we got that signal with Friday's close. Time to forget about being in a bear market and to get ready to challenge the all-time highs this Summer.

This is not to say this market isn't going to get destroyed later this year, I fully expect that it will. But it will do so from even more insane valuations than those we have already seen. For now it looks like we're going to make them all stampede heading into this congressional action this year. He seemed to be in the midst have a first ever triple bottom recession having just seen or being just a at bottom number two.

Things me hold up in other asset classes better than people are expecting for a while too. Real estate, for one, is a bit different than the ‘05 - ‘06 market wherein we witnessed an implosion in the proliferation of ARMS loans, effectively creating margin calls. This time you have the “No interest” loans (and mortgages less than 5% and less than 12 years in or so are effectively no interest loans) which will take years before mortgagees begin paying down principal and are therefore pinned underwater on their mortgages. Supply ought to remain tight, which helps support price. This time is also different in that there lots of cash buyers and institutuonal participation. All told, the popping of the everything bubble appears on hold for the time being, and a powerful stock rally should be underway from this level.

More as conditions warrant.