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Given the confusion rendered from current charts, I considered not even writing this commentary, but then I realized that a confused market-state is indeed noteworthy. Perhaps this confusion coincides with fiscal cliff uncertainty. Or maybe it's reflective of the multitude of opposing calls for both recession and new bull market. Then again, maybe markets have fallen victim to the Mayan Calendar count-down. Whatever the case, I don't remember when markets last appeared so confused.
In presenting my case, there are far too many charts to showcase here. Instead, I will briefly highlight some in a quick, juxtaposed summary with inferred implications for the stock market.
Bullish case: Dollar appears to be weakening; EURO/USD once again above 130.00 even with Europe's issues. (Implication: risk on)
Bearish case: 10 & 30 year U.S. Treasury yields remain near all-time lows. (Implication: risk off)
Bullish case: S&P 500 Index is pressing up on 1420.00 resistance, even in light of a potential fiscal cliff stalemate. (Implication: risk on)
Bearish case: Many global risk asset markets that have previously lead U.S. markets still honor recovery highs placed long ago, which presents a divergence from U.S. markets that have continued to rally to new recovery highs. (Implication: risk off)
Bullish case: Cash gold remains above $1700.00/oz., and is perhaps taking a breather before the next leg up. (Implication: risk on)
Bearish case: Cash gold is well beneath its all-time high of $1920.00/oz., which was set over one year ago, even as it seems nearly everyone believes it's prudent to own gold. (Implication: risk off)
In summary, markets appear very confused. They are uncertain by nature, but may be taking things to a new extreme. I'm going to kick back and relax for a bit, while watching for signs of clarity. This seems to me to be one of those times when markets should not be pressed, one way or the other.
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