2009: The Year of the "W"
With White Snake echoing in my crowded keppe and a multitude of crosscurrents jockeying for attention, I wanted to clear the mechanism and scribe some vibes as a follow up to yesterday’s morning missive, which seems to be garnering a fair amount of attention.
In no particular order:
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A smart man once said you can game the market direction or nail the timing but you'll rarely capture both.
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From a big picture perch, my sense is that 2009 will look like a "W" and we're somewhere near the middle peak.
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Through a pure technical lens, an upside breach of S&P 875 should power the tape higher. How far—and for how long—is the question I'm currently wrestling with.
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Paradoxically, technical affirmation is a likely precursor to maximum downside frustration.
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As I learned in 2003, agendas must be respected. No matter your view, we would be wise to remember that a cornered animal has little to lose.
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We must remain conscious that technical analysis is but one of our four primary metrics (fundamentals, psychology and structural being the others).
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We've long respected the other side of our Wishbone World should the dollar meaningfully debase. Understand, however, that the velocity of money can't be artificially manufactured.
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At the end of the day, it comes down to one thing: debt. There's too much of it and inducing more is masking the symptoms rather than curing the disease. That is the single greatest flaw in the recovery thesis—that our current stroke is swimming backwards.
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A word to the wise. When in doubt, wait it out. If opportunity cost is our greatest loss, we should consider ourselves fortunate. There will be easier trades and better days and our goal as Minyans is to achieve financial staying power so we can prosper when they arrive.
The yellow metal debate is pretty fierce. On one side, you've got a viable argument that it's the only true store of value in a world full of fiat currencies. On the other, there is the view that, in the words of Warren Buffett, "It has no utility. Anyone watching from Mars would be scratching their head."
The Gold Scold
The truth likely lies somewhere in the middle and is measured by the ultimate arbiter of price. Through that lens—and purely through that lens—I would note the three consecutive "lower highs," which is a technical negative no matter how you slice it. 
Click to enlarge
I would also draw your attention to the support zone of $855-$865, which has already been tested twice and, if breached, would be of technical significance.
Random Thoughts
R.P.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
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Opportunity cost is the other side of discipline
Opportunity cost is the other side of discipline
Opportunity cost is the other side of discipline
not sure about this commandment...the painful part is watching this market rally without you so opportunity lost there but what to do if the market spikes to sp 1000? do you go in and short it then and "hope" we get that W...it seems like market could have bottomed and is climbing wall of worry - I mean we just went through THE Crash (worst ever in the market)....
but all the more worth it for that....
Excellent.
What concerns me, is that if we do go into a "W", then the "green shoots" plan won't work. Total bank loses are ~$3T, and if we go back down into the second dip, it could force them to do a bank restructuring. Then as you point out, this could break the weakest link, and force a derivates unwind.
Going to keep my fingers crossed that we only have a "W" year, and not a "WTF" year.
Soros is predicting the inverted square root, which is the first dip/rise in the "W", then half way back down, and then a flattening out. It could be described as "we made it by the skin of our teeth" scenario, although there would be a long flat period.
But in either prediction, there is a second dip (I'm going with yours)
Buckling my seat belt. It's always better to be prepared.
<shrug>
I'm thinking we'll see a WL_~~JV~~
I'm buckling my seatbelt like Mr. Bacan.
My fear is that we will see a combination of 30's and 70's ecomonmic factors, with the politics of FDR and Jimmy Carter.
Ugh.
I got out at the high April 17th and went to TIPS and Gold stocks and fixed. I'm not afraid, I just don't want them to be playing with my money as the rules change weekly and daily. Chrysler and GM owned by the taxpayers and UAW? Banks owned by the government?(FDIC funneling money and bailouts, preferred to common, etc.) Ummm...no thanks.
I'd rather bet on the inevitable inflation whiplash (after deflation and debt unwind), then throw it back in at the real low of DOW 4,000 S&P 400. If that bottom doesn't come, I'll be happy not losing more and especially not giving the crooks my poker chips to squander and use for political agendas.
-The T would be late to early next year (possible, bond, or derivative market crisis)
-The F would be the splitting of economy into real and fiat (high inflation). Moderate real growth in real assets, low real growth in others (stagflation)
2011,13, 15?
All just guesses.
But I try to be optimistic. Lets go for the W
