Graphite here.
Although it’s easy for this kind of contrarianism to turn into unhelpful navel gazing, on Friday the level of despondency seemed to hit a new high (or is it low?) on the bear blogs. Posts and message boards are chock full of buzz about perpetual asset inflation powered by the Fed’s magical money machine [...]

Some charts from historical tops in the Dow, starting with 1901:

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The giant gap down above did not happen in a day. The government forced the closure of the NYSE on July 27 (after a crash when the closure was foreseen), and it was not reopened until Dec 14. The Great War started in the interim.
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In [...]

Put this down in the list of no-fuss, no-brainer, long-term trades. Simply buy 10-year Treasury notes and short junk bonds. There is no purer deflation play than this. It doesn’t even matter if Treasury yields rise (unlikely anytime soon IMO), since you’re playing the spread and junk yields will always include Treasury yields plus a risk premium.

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What [...]

Someone asked for clarification on where I think we are in the wave structure, so naturally I broke out my kiddie drawing program:

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Seriously, it’s hard to get precise about labeling waves at anything but larger orders of magnitude. It’s more about the feel of the market (whether it is the probing ones and twos or [...]

When the short-term gets hazy, remember the big picture.
The drop so far (about 6% in 12 days on a closing basis, 9% in 13 days intraday):

Source: Prophet.net
Here are the conditions I am watching: RSI on the daily scale is now oversold. However, DSI bullishness has dropped from near 90% to the 30s, which still leaves a [...]

Here are the last 20 trading days of the Dow in a 60-min chart.

Source: prophet.net
Note the upward divergence in the bottom RSI, indicating that each downward movement since the 22nd has been weaker than the last. This can be an indication that the urgency to sell is waning. Perhaps it is all part of a [...]

A market that ignores buy signals is a weak market. We continue down where we would have rallied during the past 6 months. The swiftness, uniformity and persistence of this decline hint that it is the start of a big one.
At the moment, I’m fairly neutral on stocks, since I don’t feel I have an [...]

I was extremely, almost uncomfortably short for the last couple of weeks, and with the Dow down 175 a few minutes ago, I covered my stock futures shorts and bought a few contracts to hedge up my long-term puts. It’s looking very good for the shorts — dollar up across the board, bond spreads wider, [...]

S&P 500:

That’s not a projection for a final bottom, by the way… that would be lower.
Gold, from 1971 (Richard ”I am now a Keynesian in economics” Nixon):

Note: Under Bretton Woods, the dollar of course was pegged at 35 to the ounce from 1933 to 1971.
Gold has been in a parabolic move since ‘04, and the degree [...]

From Chart of the Day:

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What was that about credit being the lifeblood of the economy? Well, the 2000s saw the greatest bubble ever, and all it got us was richer bankers. Robert Prechter often says that the depression started with the bursting of the dot-com bubble and deflation of social mood from the euphoria of [...]