Yielding To No Bull ~ The Risk Averse Alert

Thursday, April 22, 2010

Yielding To No Bull

CNBC's Fast Money trader Gary Kaminsky gave his two cents today on the expanding number of NYSE-listed issues hitting new 52-week highs ... first, suggesting that portfolio managers' averaging their purchases into the NYSE's leading performers is a "healthy sign" ... then, saying that in the past twenty years never has a massive correction followed when 450 NYSE-listed issues were hitting new 52-week highs.

Now, were we in some large, multi-year bull market, then both of Kaminsky's points might be thought valid. However since October 2007 we have been in the midst of a major bear market, with the advance off March '09 bottom being but a larger-than-average, [bear market] counter-trend rally occurring just prior to a massive decline whose portent, indeed, threatens to be the very stuff generations of souls yet born will one day make legend. As such, then, Kaminsky's sanguine conclusion is entirely misguided.

What he calls a "healthy sign" I call the mark of suckers, because there is in fact real trepidation behind the advance off March '09 bottom revealed via the raw number of NYSE-listed issues presently setting new 52-week highs — the very thing Kaminsky cites as discounting any likelihood of a massive correction anytime soon.

Considered in the midst of a 75% gain in the NYSE Composite over the past thirteen months the raw number of NYSE-listed issues hitting new 52-week highs is, in fact, terribly pathetic ... particularly considering that, nearly 2500 NYSE-listed issues were setting new 52-week lows during the climax of selling in October 2008.

This point I made last week ... and Kaminsky's contrary view rolls off that analysis like water on a duck ... especially when you throw into the mix the same situation — yet even more conspicuously lagging — on NASDAQ.

So, the slow, deliberate transfer of shares into weak hands continues unabated, notwithstanding any strained increase in the number of listed-issues hitting new 52-week highs...

SPX 5-min

The above view details what prospectively might be upcoming in the formation of the fourth wave of five waves up from early-February bottom. The degree to which "see no evil" believes its view forward (a.k.a. fantasy) possesses credibility by the still-solidifying public-private partnership now masking as financial "reform" is evidenced by this week's buoyancy following last Friday's SEC bombshell charging Goldman Sachs with fraud.

Dennis Gartman might have been satisfied that, the President didn't bring out a "hammer and sickle" in his speech today at Cooper Union in New York City, but does the swastika the President waves in assuring continued bailout of a hopelessly bankrupt enterprise raise even an eyebrow? Does the human sacrifice required to keep appearances of solvency intact for a few more months (which is the best that Senator Dodd's "reform" measures might accomplish) cause anyone to blush?

Look even now at the human cost. This will only worsen as a consequence of the current legislative attempt at financial "reform." Let's be clear. The principal of this effort mainly is meant to sanction asset grabs for pennies on the dollar so that added leverage can be tacked onto a financial system already grotesquely leveraged. Thus, the President's suggestion the taxpayer will be spared further bailouts could only be true were he acknowledging the likelihood even greater numbers of Americans will lack an income on which to even pay their taxes.

Suggesting a pack of thieves offer legitimate value to the nation's economy ... whose business', therefore, must be spared ... is the epitome of such corruption as gives Tea Parties much energy. Signaling financial power will not be retrieved (as it rather should be — see Article I, Section 8 of the U.S. Constitution) from reckless enterprises whose former claims of capacity to self-regulate have become today's laughing stock is the mark of such weakness as has turned countless Presidents into silly, inanimate puppets of imperial finance — the now terribly vulnerable, eternal enemy of the American republic. And moving forward with legislation meant to further legitimize an enterprise rife with fraud — and this at all costs, human and financial — represents such surrender, practically speaking, as all Americans were warned about so many years ago...
One of the great American industrialists of our day—a man who has rendered yeoman service to his country in this crisisrecently emphasized the grave dangers of "rightist reaction" in this Nation. All clear-thinking businessmen share his concern. Indeed, if such reaction should develop—if history were to repeat itself and we were to return to the so-called "normalcy" of the 1920’s—then it is certain that even though we shall have conquered our enemies on the battlefields abroad, we shall have yielded to the spirit of Fascism here at home.
President Franklin Delano Roosevelt, 1944 State of the Union Address

Yield away, Mr. President. Your fantasy about the so-called "free market" is bull...

Fast Money
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