No Bottom Yet in Sight ~ The Risk Averse Alert

Thursday, May 20, 2010

No Bottom Yet in Sight

Well, let's see. After thirteen months spent spoon feeding shares to suckers with an affinity for helicopters hovering over a deep sea of bankruptcy ... the inevitable rogue wave crashes into lenders of last resort worldwide and faith evaporates faster than you can say "global recovery."

With the volume of shares recently shoveled onto the market rivaling the bad old days of '08 and then to boot, a wide swath of listed issues driven lower just like then, too ... there plainly appears something nasty afoot. Odds are the move down from April top is not merely a correction of gains made since March '09 bottom. Rather, resumption of a giant bear trend begun in October 2007 quite likely has commenced.

SPX 5-min

Yesterday's bounce was thought suspect because no discernible improvement in relative strength late-Tuesday, early-Wednesday preceded it.

See any improvement yet? Nope. There's risk of further selling, then.

And they say history never repeats! Mark Hulbert most definitely was singing the same tune back in early-'08.

Apparently, a hope-filled tendency built up over recent decades by a credit bubble involving the greatest Ponzi scheme the world has ever seen continues trumping a reality wherein otherwise plainly demonstrated is truth the globe's dying, fraud-rife financial system is hopelessly insolvent.

Investors Intelligence

Just look how bearish investment advisors were in 2008 (pay especially close attention to July '08). The lesson plainly is that, it is a mistake evaluating sentiment readings wearing a bull cap when the market is vulnerable to devastating runs.

Being the need to raise capital selling liquid risk assets presently is necessitated by a collapsing credit system leveraged to the teeth ... and being power to stop this is nowhere near capacities available to national treasuries and central banks ... the state of mind among investment advisors, even following the shock of May 6th, generally appears delusional to say the least.

Mark Hulbert taking stock in the rate at which sentiment has become less bullish merely adds icing to the crazy cake baked by a bunch of proven incompetents running roughshod over both the private and public sectors. Bon appetit.

Fast Money
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