Reply #15: In Memoriam: The Mini-Bull Market [View All]

http://www.gold-eagle.com/editorials_04/rostenko060104.html

Stocks came back to life last week as all the major indices posted substantial gains. The dollar gave up quite a bit of ground while gold continued to climb, finishing out the week with a new 1-month high. Meanwhile crude oil futures reversed from earlier gains to close under $40.

This week we wax a bit more philosophical. The market, still trapped primarily in back & forth neither-here-nor-there action for months, isn't offering much to inspire our usual fare of stimulating prose and keen (ok, comical) insights.

While last week's gains might have been impressive, let's get some perspective. The S&P 500 hasn't seen a new high since early March. The Nasdaq Composite: not since late January. The major indices remain in intermediate-term downtrends, in well-defined patterns of lower highs and lower lows. From a technical perspective, so far we haven't seen any action indicating that new highs are forthcoming.

My expectation that we're in the midst of a major topping formation remains unchallenged, at least by the market. In fact, the "action behind the headline action" continues to point toward a major distributive pattern that typifies major market tops.

According to the Vickers Weekly Insider Report, corporate insider have been selling stock at a furious pace throughout 2004. Fourteen billion dollars worth in the first four quarters. David Coleman states that insider sales have NEVER been higher, since the company started tracking the data in 1971.

Ask yourselves this, folks: why are the people most intimately familiar with their own company's prospects unloading stock at an unprecedented pace? If you believed in the future of your stock would YOU be selling it?

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