As most you know, I am never at a loss for words when it comes to the markets of the world or macro economic policy.  I frequently arise at 3 AM to watch CNBC world broadcast.  They have a live discussion between a commentator in Singapore, London and New York.  This is only available between and 3 and 4 AM each day. This gives me a "feel" of what is going on in world-wide economies and markets.

Now, it appears there is a "Joe McCarthy" feeling going on in the general public, i.e., he saw a "Communist" behind every tree and under every rock.  Today, almost everyone sees a bear market in some places. Always remember that when an opinion is held by everyone—IT SIMPLY CANNOT HAPPEN. 

Having said the above, I readily admit that I too have been expecting a sell off in the market place of maybe 10% and have prepared for same.  All my metrics are in OVER BOUGHT TERRITORY.  However, I am also aware that they can and do stay in this area for very long periods when recovering from a very serious bear market, such as 2000 to 2002.

Bear markets throughout history have never just appeared overnight unless caused by an unexpected external event such as a terrorist attack, act of nature, or some event beyond the control of man. Therefore it is prudent to always be on the lookout for changing events in world economics that MIGHT EVENTUALLY LEAD TO A BEAR MARKET.  The bear by his very nature, just DOES NOT SUDDENLY APPEAR OUT OF NOWHERE.  I live in Montana and have had two separate encounters with a Grizzly bear and on both occasions he made a huge amount of noise in the trees before I ever saw him thus giving me plenty of time to get to safety. That is one of the reasons it is called a bear market.

As a further note, just in case you are interested, I watch approximately 32 indicators concerning market strength and direction and one that I rate very highly is the Dow Jones Transportation Index.  It is my opinion that it does very little good for General Motors to manufacture a large number of vehicles and just put them out in a car lot, THEY MUST BE SHIPPED BEFORE IT IS MEANINGFUL. Thus, my interest in the "Transport" index.  It is really important that the industrials and transports both be moving in the same direction. But, when in doubt "TRUST THE TRANSPORTS"

Please let me know if there are any market-related questions that you would like me to answer.  I will, of course, try to answer them.

Have a happy/great day,

Jack