Boom: The Speed of Light & The October Surprise

Posted by Bob Hoye - Institutional Advisors

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“All the choices we’ve made have been the right ones.”

– Obama on ABC News interview, October 18

He should have said that all the choices made were the “left” ones.

“Reid signals government jobs must take priority over private-sector jobs.”

– The Hill, October 19

“Federal employees [in the beltway] compensation averages more than $126,000, which is up from $122,697 in 2009.”

US Median Household Income was $54,442 in 2010, down from $54,719 the previous year.

“An increasing number of Republican presidential candidates are talking about returning the U.S. Monetary system to the gold standard.”

– Rasmussen, October 21

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Volatility has become the byword for “Down”, volatility was generally expected to run into October. Our October 4th conclusion was that “It could take a week or so to get the DX down and all the disasters up.”

That’s the way it seems to be working out and disasters did not continue through October.

In the meantime, how long can the sunshine last and how bright can it get?


It happened rather quickly.

On the S&P Ross had a target range of 1222 to 1258. Monday’s high was 1256, and today’s “news” about the Euro “fix” has popped the stock index up to 1275. Timed with a weaker dollar the announcement is being celebrated with prices rising for most of last month’s disasters.

With this, the daily RSI on the S&P had a big swing from very oversold to somewhat less than overbought. A few days of surge could make this overbought–perhaps enough to force a consolidation.

In looking around for confirmation, the RSI on the bond future seems to be establishing the opposite swing in momentum.

Then, crude oil’s recent rush has accomplished a big swing on its RSI. Worth noting is that this could be a delayed seasonal high. Delayed because of overall troubles into early October. Once topped, crude could decline into January.

Recently physicists have expressed doubts about the constancy of the speed of light. Keeping with the latest in physics, we have no hesitance in noting that market sunshine is picking up enough momentum to limit the move.

Gold And Silver Sector

During the choppy, but favourable, action expected into the new year silver could outperform gold. It has been since early October.

That the gold/silver ratio could not take the “next leg up” in early October signaled improving possibilities for the general financial markets.

This can continue and we remain confident that action in the ratio will give us advanced notice of the return of liquidity concerns.

In the meantime, the rise in this – the really shiny sector – can continue for a couple months. That would be within a secular bull market that could last until the secular credit contraction exhausts itself.

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Central Bank Computers

Exuberance In = Exuberance Out

(For most of the time)

Except in 1921, 1929, 1973, 1980, 2000 and 2007, which were overextensions with consequent collapses severe enough to overwhelm the Fed’s ability to inflate.

Admittedly, the Fed did not have computers in early times, but then it has been infinitely reckless in theories and practice since day one.

Link to October 28th ‘Bob and Phil Show’ on