Market Ruminations

I have no idea where we are or where we are going. There is a lot of volatility in the markets right now, so much so that there is no way of getting a fix on direction. Gold made a parabolic rise up to over $1900 an oz and then collapsed $150 down in 48 hours. It has since regained almost all of it's losses. The Dow was going up and down on alternating days 4-500 points at a clip before settling down. I was sure we were due for a pop up from an extremely oversold condition and tried to get back in with DDM but got stopped out twice in a row with the huge interday moves. Things have settled down a bit now so I am going to see if the market will indicate which direction we are going before I try again. Longer term I still think we have a lot more down side potential than upside potential. The Fed has finally fessed up and admitted it can't do much to help the economy and it's up to Washington to accomplish the rest. If we get a QEIII, which I suspect we will, it will be more to bail out the banks than to help the economy. The short story is the economy is broke and can't be fixed. If the government cuts spending it will reduce demand and that will lead to more unemployment. If the government raises taxes it will reduce demand and that will lead to more unemployment. If the Fed does another QEIII thing it won't do anything to help unemployment but will allow the banks to make a little money by borrowing at 0% and buying Government Treasuries at 4%. Guess who pays the interest on the Treasuries ? Yup, you guessed it, the taxpayers. The QE's are nothing more than a taxpayer subsidy of the banks. Meanwhile the mining of the nation's 401-k wealth goes on unabated with the hedge funds driving the market down and short selling all the way. My suspicion is that the hedge funds won't stop until they have taken back all the money made in the markets since the 2009 lows. That means their ultimate target is below 7000 on the Dow. Assuming that is their target the money to be made in the next couple of years will be on the short side of the trade. In any event I think the markets are going to take a direction soon here and once again I will try to catch a wave. As usual, I'll keep you posted.