Obscuring the Obvious

I wear my sunglasses at night
So I can, so I can
Forget my name while you collect your claim
--Corey Hart

Interesting missive by Minyanville's Jeff Cooper on current stock market position. Major indexes are at or near all time highs. High flyers are flying high in dot.com deja vu style. Companies are making acquisitions using bloated treasury stock as currency. Momentum traders have grown accustomed to chasing vertical moves.

"Don't fight the Fed" and "Buy the dip" have become the dominant heuristics at trading desks worldwide.

However, volatility is on the rise. And as Jeff observes, volatility often precedes trend reversals. "The caricature of price action can obscure change," he deftly adds.

He concludes:

"It's dreamland sprinkled with $50 billion condos in New York City. The Federal Reserve's infusion of trillions of dollars into the system benefits the banks and the wealthy at the expense of everyone else. Remember that the constituency of the Fed is its member banks, not the public. When politicians turned over money creation to the Central Bank, it turned over the economy to the bankers."

As observed on these pages, we are in the midst of the greatest wealth transfer in the history of the world. Those lining their pockets at the expense of others will do all in their power to keep the party going.

Rest assured, however. This party is not perpetual. At some point, pent up natural forces will overwhelm their restraints and move the system to a more balanced position. Wealth will journey back toward its rightful owners.

Although current price action makes this change so difficult to see, it will appear obvious in retrospect.

position in SPX