Market on Cruise Till Bonus Time , by Rick Ackerman

October 10th, 2006 Price: Subscribe »

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ARCHIVED COMMENTARY

Market on Cruise
Till Bonus Time

For edition of December 05, 2005

I’ve reproduced hourly charts below of the mini-contracts that we trade more or less regularly. A pessimist would probably notice first that the most important indexes – i.e., the Dow Industrials (YM) and the S&P 500 (ES) -- are lagging behind the Russell 2000 (ER) and the Naz. But you could spin it another way, too – that if GM and Honeywell had not been dragging the blue chip average down on Friday, the broad market might well have continued its moonward ascent.

As it is, the Dow finished only 35 points lower on the day despite the fact that Alan Greenspan has been beating the drums about getting the U.S. trade and budget deficits in order. If anyone had taken this talk the least bit seriously, we might have expected the decline begun so earnestly on Wednesday to embark on another leg down. But a warning from the Fed chairman these days about so mundane a matter as deficits seems about as intimidating as a fatherly plea to keep the noise down.

In any event, as 2005 heads down the home stretch, the DJIA is locked on 11000, and nothing we can conceive of is going to deter the fund managers from getting their just desserts come bonus time. Stocks are likely to remain on autopilot for the remainder of the year, so we shouldn’t look for much more excitement in the weeks ahead than we saw on Friday.

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Eliades Expects Major Top

Count our friend Peter Eliades (www.stockmarketcycles.com for subscription info) among the first-rank technicians who thinks a major top is imminent for the stock market. Peter, a rigorously quantitative, old-school technician who once racked up five straight years as Hulbert’s top timer of the year, says that a long– and very long-term cycle are due to bottom over the next 12-24 months. If so, he notes, an important top should be seen before early February.

“The psychological background appears to be almost perfect for the formation of a major top,” writes Peter in the December edition of Stockmarket Cycles. “Investor and adviser bullishness is unprecedented in its longevity when compared with prior long streaks of bullishness in the history of Investors Intelligence data going back over 40 years. The market is just weeks away from completing its third consecutive year without one

weekly reading showing a plurality of bears over bulls.

“One would think that that kind of stubborn and pervasive bullishness might occur with a market background where excellent or even spectacular market gains had been achieved. The amazing truth is most of the time since this consecutive streak of bullishness has been building market has gone absolutely nowhere. Over the past 22 months, the Dow Jones Industrial Average is up 1.5%. We have always maintained that market sentiment must be examined in the light of underlying market behavior. When bearishness builds or remains high during a sideways market move, you can almost be assured the next move of significance will be to the upside. Conversely, when bullishness builds or remains high during a sideways market move, it strongly suggests the next market move will be a decline of significance. We will discuss market sentiment in more detail in the next section of the newsletter.”

(The following is from a friend of mine, a Berkeley cat lady. Very funny, I think. RA)

From a Dog's Diary

8:00 a.m. Oh, boy - Dog food - My favorite

9:30 a.m. Oh, boy - A car ride - My favorite

9:40 a.m. Oh, boy - A walk - My favorite

10:30 a.m. Oh, boy - Getting rubbed and petted – My favorite

11:30 a.m. Oh, boy - Dog food - My favorite

12:00: Oh, boy - The kids - My favorite

1:00 p.m. Oh, boy - The yard - My favorite

4:00 p.m. Oh, boy - To the park - My favorite

5:00 p.m. Oh, boy - Dog food - My favorite

5:30 p.m. Oh, boy - Pretty Mums - My favorite

6:00 p.m. Oh, boy - Playing ball - My favorite

6:30 a.m. Oh, boy - Watching TV with my master – My favorite

8:30 p.m. Oh, boy - Sleeping in master's bed – My favorite

From a Cat's Diary

Day 183 of my captivity. My captors continue to taunt me with bizarre little dangling objects. They dine only on fresh meat, while I am forced to eat dry cereal. The only thing that keeps me going is the hope of escape and the mild satisfaction I get from ruining the occasional piece of furniture. Tomorrow I may eat another houseplant.

Today my attempt to kill my captors by weaving around their feet while they were walking almost succeeded -- must try this at the top of the stairs. In an attempt to disgust and repulse these vile oppressors, I once again induced myself to vomit on their favorite chair; must try this on their bed.

Decapitated a mouse and brought them the headless body, in an attempt to make them aware of what I am capable of, and to try to strike fear into their hearts... They only cooed and condescended about what a good little cat I was. Hmmm, not working according to plan.

There was some sort of gathering of their accomplices. I was placed in solitary confinement throughout the event. However, I could hear the noise and smell the food. More importantly, I overheard that my confinement was due to my power of "allergies." Must learn what this is and how to use it to my advantage.

I am convinced the other captives are flunkies and snitches. The dog is routinely released and seems more than happy to return. He is obviously a half-wit. The bird, on the other hand, has got to be an informant, and speaks with them regularly. I am certain he reports my every move. Due to his current placement in the metal room, his safety is assured.