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The Three Wise Men of Today's Market


It's time to give thanks to the Magi Market.

Editor's Note: The following is a free edition of Jeff Cooper's Daily Market Report. For a 2-week trial FREE trial of his daily commentary and nightly day and swing trading picks, click here.

And high up above earth or down below
When you're too in love to let it go
But if you never try you'll never know
Just what you're worth
-- Fix You (Coldplay)

But I am constant as the northern star, of whose true-fix'd and resting quality there is no fellow in the firmament
-- William Shakespeare

Tradition has it that Three Wise Men or Kings from the East saw a star in the east and came to Jerusalem bearing gifts.

Looking back on the year, seven weeks after Inauguration Day, it seems as if a new bull market was born to lead the faithful out of the financial desert.

The equity rubber band was either pulled back or allowed to take a dive into the promise of a new beginning that comes with spring.

In the Western Church, the Three Wise Men are known as Caspar, Melchior, and Balthasar. In the Money Temples, the Three Wise Men are known as Ben, Barack, and Tim.

It's hard to argue with the facts: The Three Wise Men in search of The One were said to have brought three symbolic gifts -- gold, frankincense, and myrrh.

It's time to give thanks. Clearly, Ben, Barack, and Tim brought us gold in 2009. Gold went from a six handle in late 2008 to a near double at over 1200 in late 2009.

Main Street is frankly incensed at Wall Street's "Fat Cats". Score a bull's-eye for gift number two.

They brought myrrh-riment to money managers who knelt at the Altar of Get Even. A second year of losses, to wit, a flat year following 2008's sacrilege would no doubt cause redemptions of a non-religious kind.

Yes, it's a time to give thanks to the Magi Market. The Miracle Market. A market that in the true spirit of Christmas performed like a Miracle on 34th Street, which rose from the dead like Lazarus.

Sometimes I'm so stupid, I amaze myself. After the rise from March, I assumed that the market would react from a September peak. It was an angelic technical set up. To recap, 9/9/09 is opposite the 3/6/09 low of 666 S&P. The sixth month is usually an important pivot high in bear markets. In addition, in the same way that March 6 is 90 degrees from a price of 666 (time and price squared out at the March low) it seemed a better-than-average likelihood that early September, which was opposite the March low and then by definition also square the price of 666, would be a pivotal turning point. It's worth considering that 1111 is opposite March 6 and that 666, the price of the March low, is opposite mid-December. Is the market timing a high opposite the price of the low?

Moreover, following the worst financial crisis and market downturn since 1929, all eyes were watching the analogue of the five-to-six-month rise after the crash low in November of 1929 into April 1930, the snapback which rolled over into the depths of The Great Depression. And perhaps that's just the point. The pre-eminent scholar of the Great Depression himself, none other than King Ben, was watching with more than just baited breath. Would this king who promised to print the dollar into extinction if necessary do "whatever it takes", as he promised economist Milton Friedman that the Kingdom of Fed would "never make the same mistake again" (the mistake it made in the 1930s), and "allow" the market to roll over on its own and impair the psychology so hard earned from March through September?

Would the Three Wise Men let all their efforts of the prior six months be for naught? I don't think so. Color me a cynic but use realistic crayons: I don't think the chance could be taken to allow the analogue to truly take root and embed itself in the economic mainstream and the financial tides.

Enter The Working Group with scripture and verse preaching to the bulls.

Interestingly, it has been suggested by scholars that the "gifts" brought by the Magi were medicinal rather than precious material for tribute.

What subsequently happened to the "gifts" is never mentioned in scripture, but several traditions have developed. One story has the gold being stolen by the two thieves who were later crucified alongside Jesus. Another tale has it being entrusted to and then misappropriated by Judas.
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