Holding Steady, Looking for a Rally

But the 4% rule is our failsafe

Very little has changed since my last letter in the markets. Personally, I had a bad accident and am trying to type this with one hand.

There is still a ton of short-term fear out there, and the AAII survey last week confirmed that of the previous week. Historically, such survey numbers have been great buy points for a substantial run-up.

Add to that the fact that we had several contiguous weeks of a “red compression",” reading, i.e., an expectation of a protracted market move (one way or the other (available with Vantage Point software):

Now throw into this bullish mix one of my favorite intermediate term buy indicators, what I call “Voldiff,” which is simply the difference between the 21 day annualized, calculated “historical” volatility, and VIX. A buy signal is generated when it crosses -0 to the upside. As you can see below, we’ve had some real whipsawing down here the past week or so, in the midst of a giant fog of fear, all setting up for what shold be an explosive run-up:

Historically, you can eyeball why I like this little monkey so much:

HOWEVER……

As mentioned repeatedly here, we are on the vere of a major, MAJOR bear market - the normalization of the yield curve, the entering a period of “extreme vulnerability,” inter alia, puts this (what I believe will be ) healthy run-up (last gasp of the “Everything Bubble?”) in a very dangerous backdrop.

THEREFORE….