Towards the end of 2012 we saw a mass exodus of small retail customer out of the markets. They are also having trouble trying to figure out the logic of what's driving the market in the wake of bad news, unemployment, falling wages, the growth of participants on food stamps and a host of similar economic data. Having endured a couple of major sell offs, the small retail customer is not willing to be the bag holder for Wall-Street anymore.
It would seem that the money printed by Uncle Ben is finding its way to the big banks and then to companies who are not buying capital to secure future sales but rather are buying back shares of their stock so as to keep prices up. This is another "Ponzi" scheme that is likely to end badly.
Today we had another in an unending series of end of day mad rush buying. Here's what the chart is saying:
The SPX has now risen to the overbought stage. The 2 period RSI has risen above the 95 level and should give us a pullback starting tomorrow or Thursday. Likely the index will pull back towards the 20 dma at 1458. We should get a signal as to whether this is the beginning of a major pullback or just a rest before the push higher to the 1558 area is undertaken.
This is not the time to chase this train
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| Chart from article at Zerohedge. |
For those of you who have been told over and over that diversification is the key to long term investing and precious metals are too risky - the graph at the right should answer that question. You might want to start looking at the idea of allocating some portion of your portfolio to gold and silver. Just a thought.
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