The Next Hundred Years

I have not blogged about the market in over a week. In market time frame that is for ever. The outcomes have really been unremarkable. We have been abstaining from short selling for the last few days. But then again we have been abstaining from long buying as well.

Today I do not want to really talk about where the market is going but rather where it has been and how we will judge this time from the future. Yesterday I spent the morning at my church cleaning fallen trees from our outdoor areas. We had had a terrible storm last weekend and 4 trees had fallen in the church areas. With me working yesterday was a gentleman my fathers age. He is 84 years old and he and I spoke about what he had seen in his life. War II, Korea, Aircraft that he had worked on just everything. Eventually we talked about the Great Depression. He and I laughed at what people today are calling a potential depression. Our economic situation is no where close to the condition that Americans saw in the 1930's.

I think the most shocking part of this matter will be my take on why this depression is no where the depression of those times. It is my belief that 100 years from now George Bush, Ben Bernanke and others will be seen as some of the greatest Financial Minds of all time. How can this be? Well how could it be that I have called the market so correctly through the last month. Macro understanding of the micro-workings can only be measured after the completion of the micro processes. I think the steps taken by Bernanke et al, were genius. I will explain more later.

Climb is Over?

Whew, If you spent anytime today watching the market, after 10am you were probably getting your email ready to send to me laughing for going long yesterday afternoon. Good thing you didn't hit that send button before 1550 :). Yes technically the index was up today 41 points. Here is the problem, it was a select market up. Under our paradigm we did very well. The down market allowed us to exit many of our short positions, and the recovery in the afternoon allowed the limited number of recent longs to exit in a one day purchase.

Where does it go from here? If I said up I would have a 50 / 50 chance. The overriding guidance from our indicators suggest - I am sorry to say - Continued down...

Unlike yesterday, I am unwilling to commit to a direction tomorrow. Here is my suggestion. Watch the Asian and European markets. Ahhhh hate to tell ya. We don't lead them, we follow them, you just have to know how to read them. Oh BTW that is why at 1500 today we were thinking, yep we were right it is going to be up.

Vacillation on the market?

Last posting I stated that the numbers are unclear. Since then we have had two down days. Although the market has reported significant drops in the index go take a look at the amount the stocks have fallen. The drops have been a function of broad small drops of all stocks.

Energy counts indicate another significant climb tomorrow. Given the recent vacillations I would suspect that what the Lord giveth the Lord taketh away.

Look for a large climb on 23 October. Again we are looking at the NYSE and not the DOW.

Let's see what happens. I went long.

Does it Continue?

Not sure... Indicators are strong for continued up trend. Things get fuzzy here. Here is my understanding. If the ups do continue for the next 2 days, then there will be several weeks of majority up markets. You really cannot tell at this point. This does appear as if we have reached a localized bottom. Unlike yesterday I am not as willing to say.. "The end of the fall".

Today the NYSE was up 210 points... So yesterdays pick was correct.

Localized Minimum

It is currently 1618 EST on Wednesday 15 October. Today the NYSE market was down 620 points.

Our model indicates that tomorrow the market will return to strength. Tomorrow will climb with some strength. That will be followed by 2 perhaps 3 further days of climbs.

That is the projection...... Let's see what happens.

The election

I mentioned earlier that stock markets are like elections. Think about this, if you released a ball on a ramp 10 times. How many times would it roll down the ramp? You would suspect 10 times. Why is that? Gravity is a force that is deterministic. We won't go into the concept of what gravity is. We will just agree for now that it is a deterministic classical force that drives our perception of the world around us. Now if you flip a coin 10 times, how many times will it come up heads. You really don't know, but what we do know is that if we flip it thousands of times, then it will come up heads 50% of the time. Why is this? The same forces of gravity and motion apply to the coin. Should we not be able to determine the final result. In the greatest sense perhaps we should. For instance, if we know the height, the spin rate and so forth we should be able with some certainity determine the outcome of the coin.

So if coin flipping in essence can be deterministic why are elections so commonly 50/50 between democrats and republicans. It goes back to the discussion on infinite guesses. In the case of a presidential election here are the conditions that we have to consider. There are 400 million people in America. Rougly 100 million can vote. Of that less than 50 million will exercise that right to vote. With 50 million people with 50 million unique life experiences the voting process tends to be random behavior at best. Given two primary choices the vote results in a 50 50 split. This behavior is much like a coin flip.

There is no rationale that explains close elections other than it is a random event in which reality there is no prevailing force to drive voters. When a President wins an election with 1 or 2 percent of the popular vote, all you really know is that neither canidate interested the people. In these cases there is no prevailing force to drive the election. There may be a prevailing component for an individual but not for the nation. In the case of Ronald Reagan there was some prevailing logic that transcendented the nation.

Prove it Tony you say.... That will have to wait as I discuss stocks more.