Base

You can call this current stock market a blowoff or call it a Wile E. Coyote moment or call it a divergence or call it a disconnect or call it a lapse of judgement. You can call it whatever you want but I call it the “Honey Badger” market because this is one “crazy, nastyass” stock market - and I can’t believe I’m watching it happen all over again.

The average U.S. stock is DOWN over 1% thus far in 2014. How can that be when we’re being told almost daily that the Dow and S&P 500 are hitting new all-time highs? The answer is likely to surprise you.

The current U.S. equity market has something for everyone. Whether you are bullish or bearish, there is no shortage of indicators or charts you can use to support your thesis.

Market historians will recall the term “Nifty 50” originated in the 1960’s bull market to describe 50 wildly popular large-cap stocks at the time. Interestingly, some of the same names from that list are leading the market higher today. The question for investors, of course, is what this selective advance means for the markets going forward.

The current U.S. equity market has something for everyone. Whether you are bullish or bearish, there is no shortage of indicators or charts you can use to support your thesis. Let’s run through both the Bull and the Bear case here. In the spirit of Confirmation Bias, feel free to skip ahead to the part that best supports your current positioning.

Greed may have been good for Gordon Gekko. but in the investment world it rarely is. As Warren Buffett is famous for saying "...be fearful when others are greedy and greedy when others are fearful” [and now is such a time]...to start showing some level of fear here in the face of extreme greed by the crowd. The crowd can be right for a long time, but they are rarely right at extremes. While this time may be different, the probabilities suggest that at the very least it will be a more difficult environment for equities going forward.

The best way to understand how the stock market fluctuates is to study trends of individual stocks and broad market behaviors. I’ve created this infographic to help you do just that.

Analysts and investors seem to be very bearish towards silver, but we think that the fundamentals of silver are now becoming extremely attractive in terms of contrarian opportunities. Volatility and risk are not always commensurate, and we believe that silver offers investors fundamentals that can be much stronger than expected and returns that would be magnified by the small size of the silver market (and the bearish positioning by participants). Contrarian investors would be wise to take note.

Where do we go from here? The trend is up in the broad markets (above 200MA and Advance/Decline line is at all-time highs) and the S&P 500 is on the verge of a breaking through resistance at 1929. Why 1929? What would it mean if it did?

At the end of last year virtually every every single economist expected interest rates to rise this year as the Fed tapered their purchases and the economy improved but, in fact, interest rates on the 10 year U.S. Treasury have been going down year to date (from 3% to 2.5% after rising from about 1.6% to 3% last year). The masses, going along with this crowd, got fooled but we have been calling for a decline in interest rates for some time now due to world-wide deflation and it couldn’t be clearer to us that this is the most likely scenario for the United States. Let us explain.