My update this week is short due to my busy year-end schedule.
Santa is checking his list carefully at this time of year, and frankly based on my research analysis at year end, I would suggest that Santa might soon leave a lump of coal in the all-too-greedy bull stockings hung ready on the chimney.
The smarter or more observant market players whom paid closer attention to the real global economy and declining fundamental factors, already realized they have had a good thing going this past year, and more realistically exited the financial markets earlier over recent months to collect their joyous tidings.
As thankful teddy "bears", they have already placed their milk and cookies out for Santa. We will all know before the end of January 2013, whether or not Santa Claus rewarded the bears of bulls best in the coming festive season.
Although the SP500 has held up relatively well this week, in my view thanks to the more optimistic seasonal influences (no-one likes to be a bear or a pessimist at this time of year), the chart and cycle patterns are shouting out big warnings not to become overly greedy.
Perhaps what is most interesting is how quickly history and financial market lessons are forgotten.
By example, in the late summer of 2011, USA equity indices plunged into a mini-crash and near bear market, while the Congress and USA government went into financial crisis about running out of money.
That prelude to the fiscal cliff crisis luckily ended with absolutely no pain of any higher USA taxes or decreased government spending. Instead in 2011, the Obama administration was simply allowed to just keep on spending and thus the USA printed the needed money.
However, we all know that the coming January fiscal cliff debate will not pass by Congress or USA citizens as easily.
As for the real coming fiscal cliff, this time around, the USA politicians, no matter how creative or innovative will clearly have to endure some "real hardships" (like every other sovereign nation that had overspent) including higher taxes and reduced government spending.
For now at least, any potential for USA fiscal cliff hardships in 2013 or a more serious economic crisis is simply being ignored by the USA at large (it is not priced into the market). This situation could change abruptly and drastically.
Further, while like all the technical elves, I have been busy analyzing my own sell-side bearish research that I routinely put forward to KRTT clients, surprisingly I have also have come across some very on-target bearish research by extremely bright economists and financial analysts that agree with my negative outlook for 2013.
The two potential logical conclusions are; one - that very bright analytical minds are bearishly correct, and meanwhile the all-too-greedy money managers on Wall Street have simply been too busy to sell while indulging in their two and three Martini pre-Christmas lunches.
Alternatively we as pessimistic bears, have simply missed something, or perhaps that 2013 will unfold into a soft-landing with Central Banks continuing to stimulate and money print forever, until all countries are equally irresponsible and broke.
As usual I strongly teach that the trend and cycle charts are where the financial truth lies, and also where I place my faith and bets.
See below for my usual chart teachings and truth.
James Kelly Sr.,
Editor in Chief, BBTL Blog