Of course we’re capitalists. Of course we’re not deaf dumb and blind capitalists. Of course we’re not pigs to the trough capitalists, like Phil Gramm — and the companies who evaded all common sense regulation and almost burned down the house. But the sight of the U.S. Senate arguing about hourly rates of Detroit workers while the Titanic is taking on water inspired us with such disgust and fear and loathing that we wanted to take a scourge and clean out the law making temple.
We once recommended that every seat in Congress be wired as an electric chair. And that this chair be connected to the internet so that when 2/3 of the voters voted for electrocution that Senator McConnell or Bilbo or Blagojveich when he came in some morning would be fried on the spot. This is an idea that has some merit.
And of course the Senate is to blame for the extreme volatility that we see in the chart above. This chart will give the reader some perspective on the conditions which bedraggled letter writers must deal with. Unseen in the history of the market. As for the state of the market we saw the Dow rally by 21% off the November 21 bottom. Just in case your calculator is not handy that’s 21% in 11 days. (!!!) As of Friday’s close it was up 15.8%. Dizzy yet?
This pattern would seem to presage more downside action. But obviously, that is just an analysis. The highs and lows of November are now the benchmarks. Until one or the other is taken out it’s anybody’s wrestling match. Oddly, while we think that more downside is to come we also think you can buy lottery tickets here. But remember, if you do that you are trading, not investing. Trading requires much closer watching and selling before the inevitable plunge. Bon Chance and good hunting.