Bears: "John Doe Has the Upper Hand!"

Bears were cocky after holding a gun to the bulls' collective head for the past few days.

Then today a mysterious package arrived. And like Morgan Freeman at the end of the movie Se7en, they had a sudden epiphany: John Doe has the upper hand!



This shouldn't be too terribly surprising. 1) I've said numerous times that this rally should end in an explosion of bullishness, not a whimper. 2) The bulls quickly and decisively reclaimed the One Line on the Transports last week - this is why I said bears needed to savagely kick the bulls while they were down or risk an ass kicking if they let them get up. 3) The Chicken Oscillator said as much as illustrated in the chart below.



The Dollar Index made a new low today by one penny. That's enough to immediately rule out my primary count (this is the beauty of Elliott - it gives you clear criteria that let you know the instant your hypothesis is wrong), so perhaps the alternate count in this post is what will play out.

If the dollar cannot find a bottom after another 5 wave thrust down then in my view, the near-term deflationist arguments will need to be reexamined. In any case, deflation is supposed to be a temporary phenomenon before inflation/hyper-inflation kicks in, so perhaps we'll switch gears early. Can't tell yet.

My posts will continue to be infrequent as I'm working on some other projects. But I'll chime in when I can. Suffice it to say that I won't be taking any short term positions until I'm back, but my long term portfolio remains long (non-leveraged index & mutual funds and some paper gold). Happy trading.