12-30-2014 Comments

I haven't had much to say recently as the market melts up. The market has shrugged off many warning signs that in the past would have led to significant corrections. We are carrying 7 days of distribution on the NASDAQ. This level in the past has led to significant corrections. Mr. Market doesn't care. I suspect that the level of complacency in the market will eventually prove to be unstable, until then I remain long.

Since July of 2012 the Ten Year yield has been stair stepping upward and topped 3% on Friday. If this were a stock I suggest that the chart pattern would indicate higher yields going forward. I understand Pascal's reasoning that unless we see inflation in salaries and or job growth that real inflation may be off the table. Looking forward I don't expect 2014 to look like what we experienced in 2013. The US markets appear over valued to my eye, however commodities and emerging markets may have based long enough to warrant a recovery. Certainly the general disdain of gold is the kind of news one would expect at a bottom. The Baltic dry shipping index has been rising, probably indicating a pick up in economic activity. I would expect to see this accompanying an emerging markets recovery. Dryships (DRYS) has recently broken out. DRYS doesn't have CANSLIM type earnings but I certainly have seen this sector lead in the past (2006-2007).

I updated my watchlist in the stock selection section.