With the Dow average down 75 points in the early going yesterday, it felt for a little while as though the stock market was about to take an emetic plunge. Instead, the blue chip average got traction just above Friday’s lows, then rallied to finish slightly down on the day. From the looks of the chart below, we’re inclined to view this go-nowhere action as consolidation rather than distribution – a staging period that eventually will provide sufficient power to push key averages to new all-time highs before year’s end.

(Click on chart to enlarge)

With seasonal factors about as bullish as they get, and December option expiration in just three more days, it seems highly unlikely that shares are about to reverse direction and head south. The Fed announced that it had held administered rates steady for a fourth straight month, and although this news may have disappointed some investors, it could not have surprised anyone. The bullish spin was that the Fed’s apparent concern about the cooling housing market could give impetus to further easing in 2007.

Filmmaking on a Shoestring

Judging from the easy-credit offers that have filled my mailbox to overflowing lately, money couldn’t get much easier, at least not at the household level. Indeed, if I were to take up all of my would-be creditors on their too-generous offers of both secured and unsecured loans, I could probably raise enough cash to turn the screenplay that’s been moldering away in my desk drawer for the last five years into a low-budget movie. Isn’t that how Spielberg got his start?  Or maybe I’m confusing him with Robert Townsend, whose Hollywood Shuffle was shot on “plastic”?

Lest the day go by without my warning you of deflation, or of pointing out the egregious stupidity of those who think the Fed can monetize away our problems, here’s a supportive note from a respectable economist, Paul Kasriel, that came by way of our uber-deflationist friend Jas Jain, who lifted it from an interview with Kasriel published by Motley Fool: “Most people are not aware of actions the Fed took during the great depression,” noted Kasriel. “Bernanke claims that the Fed did not act strong enough during the great depression. This is simply not true. The Fed slashed interest rates and injected huge sums of base money but it did no good. More recently, Japan did the same thing. It also did no good. If default rates get high enough, banks will simply be unwilling to lend which will severely limit money and credit creation.”

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London Seminar

I’ve had some requests to give a Hidden Pivot seminar in London, but not quite enough yet to make the trip worthwhile. If you’d be interested in attending a two-day class there, probably sometime in the spring of 2007, please let me know via e-mail, including your contact information.