November 24th Edition

Good Morning All,

Markets resumed their two steps forward, one step back routine last week as they once again assailed the previously attained heights of 1100 on the S&P 500, only to give back this hallowed ground through the late weakness inspired by options expiry on Friday last.

Once again the issue for the bears has been the low volume of the advances, while the bulls, among whom I must number myself, remain confused about the effect of the "flash trading" and "dark pool" trades.

What we do know for certain is that a vast horde of late money remains uninvested at this juncture. With this in mind, we have put forth the belief on more than one occasion that a large volume "blow off" rally still awaits us; a rally that may have a temporary pause around December 10th, followed by a renewal after Christmas that moves our favourite average toward 1300 in early March.

Commodities have maintained their royal status during the recent run-up, with gold racing to new nominal highs. Some weeks ago, this letter suggested that the new gold bubble could stretch prices beyond 3000 dollars per ounce. This trade idea is gaining both momentum and credibility at once. The bandwagon has yet to fill up, and even when it does, further hook ups will become available. Rightly or wrongly, this is how markets work. If you don't believe me, read a Nasdaq chart from 1999 to March 2000; or more recently check the ascent/descent of housing prices.

Commentary

Only in America, you say!

Well so it would seem, as Sarah Barracuda's musings heads to the top of the best sellers lists, liberals everywhere wonder whether anyone buying the book can actually read. Oh, strike this nasty statement, it is just the jealous reaction of the yet-to-be-published.

But seriously folks (I like to get folksy at times), how is it that the very people who are most responsible for the present economic crisis can get away with organizing, funding and leading the "Tea Party" movement, a series of gatherings that are mostly attended by their victims, who lustily cheer them on when they ascribe blame for the state of America, to the people who are trying to fix the problems. Worse still, how do a bunch of insurance company lobbyists convince the people they are in the business of screwing, that a much cheaper and universally available government option is bad for them.

Truly a case of dumb and dumber.

"The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity."
W.B. Yeats from "The Second Coming"

Bill Copp
Montreal , Canada
November 24, 2009
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