Oil prices vs Liquidity.......................

The market continues its climb higher on h-opium fueled by a false sense that the European problems have reached a final solution, the massive amounts of liquidity the Global Central Bankers have injected into their economies are showings signs of rejuvenation and the media's constant lies of how everywhere there are signs of a  U.S. economy that is about to break out to the upside.

The facts remain that:

1. The European economies are no where near a final solution.
2. The U.S. economy is closer to recession than recovery.
3. The market is now getting smarter in that the price of oil now reflects the belief that all that liquidity will result in massive inflation. Remember that we've shown that the demand for oil and gas is falling.
4. Wage growth is declining and 
5. The consumer is saving not spending.
6. The housing market is still flat on its back despite the lies from the NRO. (see chart Below)
7. The Auto industry is selling vehicles only because they hired the loan experts from Countrywide Mortgage.

Here's a quote from Tim Straus at http://www.theburningplatform.com/?p=30195 and the comment covers my feelings on this market to a tee:

In the meantime, from one who has totally underestimated the power of the combined strength of central banks providing massive liquidity injections in unison, I remain as concerned by what I see going on in this country as I have ever been..............................

Here's a chart that we need to keep our eyes on for the next few months. I really feel we will know if this market will continue to rise on fairy dust or will finally succumb to reality by the Ides of March.

Crude Oil

On the chart we have the oil (WTIC - West Texas Intermediate Crude) shown vs the US dollar as a solid blue line. In the lower window is the SP500.
Note the green dotted line at the $110 dollar level on the right hand scale. The key takeaway here is the fact that the last two times the WTIC pushed above the line we had a major correction to the SP500. Odds favor the same results this time as the economy is not strong enough to handle the effects of oil at this price for very long.

Dumb Money- Guy Lerner

When the h-opium  gets too high the market starts flashing signals of too much greed or fear. Right now the dumb money is way too enthusiastic about their chances of the market going to the moon. The indicator (Dumb money) is  a composite of 4 inputs. Go to TechnicalTake to see the details. Time to reign in the exuberance.

One last chart - on Housing. You tell me if you can see the same turning point the mass media was so giddy about this week. Looks like we are still flat-lined for the moment and you have to wonder what's going to happen when that inflation thing gets going and interest rates start to rise. We are as close to zero as we can get thanks to good old Ben.

We are getting to the point where you are going to need to put your Plan B into action very soon. You do have one don't you?