Wednesday, November 01, 2006

Down? Are you kidding?

Well today - first on the or year for some funds and first of the month and we go down over 10 handles. Fascinating...When thinking about how steep and fast the last rally was I decided on what I believe drove it up. I think it was a foreign central bank or gov't inflows. It would take a while to prove/disprove that theory but who else could 1)have that cash 2) be so indifferent to price? So what happens if it was another central bank who pushed the market up into the month/year close and is now done buying? Face it - the economic numbers are crap. Fed funds are pricing an EASING in march and while people say earnings are good those earnings are based on lower forecasts and stock buybacks.

Ive been wrong this whole way up - not on the economy but on the market and that is a very important distinction. Its not what I think - its what the market things. The last few days have been pointing to a sharp move down and if we are going to get one its going to have to happen soon before confidence builds and we proceed north.


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