Bear Market or Treading Water? Getting All the Ducks in a Row

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A number of questions have come in since year-end asking what would happen since the Dow did not reach the 18500 level. We also warned that the support was really down at the 16978 level and we need a daily closing beneath this level to signal a sustainable decline for now. The main bank of support begins at the 16300 area. A weekly closing beneath 17722 will shift the market into a basing mode. We are not looking for a 5 month bear market collapse. The market will rise again to new highs. The rally thus far does not include the retail broad market. That will come when people begin to see government as a risk and the flight to quality reverses from Public into Private.

This is why we also need a further decline in gold. The flight to safety is still now into government bonds – not gold. All the ducks have to be in line to cross the pond. Nothing is in isolation. We have to grasp the world economy in its entirety.