PIVOT

Like I iterated in my post last week, this market is on the cusp. The longer we consolidate above SP 1000, the more the balance shifts heavier towards bullish over bearish sentiment. We are seeing it all over the place. I could name names, but ahem... we all know somebody... anyway the list of converts would be too long and not reserved to the likes of just Paul "Obama is wrong" Krugman who is now in the camp of those who've smoked one too many green shoots. Abbey Joseph Cohen, who I hereon shall refer to as just Joseph, popped up on CNBC out of nowhere (wasn't she fired last year?) and said the new bull market has started, ha! Although, I must admit my amusement at her relentless habit of prefacing all her statements with the clause "we believe that..." as if she is a mere puppet mouthpiece for the Goldman consortium who is trading in the shadows while misleading the masses in much the same way they talked up housing and continued to sell sub prime to the public on one hand while betting against it on the other by loading up on CDS's from AIG.

I said last week that the sell off in China is not over, but that markets would go on a hiatus from selling and rally for several days, just what we saw last week, before resuming down again by month's end. On Friday China dropped 3 percent and yet US indexes crawled higher on what many would attribute to "end of the month window dressing." All the dregs that didn't rally an iota throughout this six month rally began floating to the top in a rotational fashion, playing catch up with the market and making up for 6 months of slothful neglect in a record several days, another great indicator that the top is approaching. AIG, FNM, FRE, etc, and amid the recent talk about shipping stocks having failed to participate in this stock market rebound, they too got bought up with impunity all of a sudden last week.

I cannot help but be amused and equally disgusted when people talk of window dressing purely in the context of how to avoid getting caught against it and without even the slightest mention of just how absurdly unethical it is. The most blunt unequivocal concrete definition of window dressing is: the common month end practice of hedge funds colluding to manipulate the stock market and deceiving their clients at the same time.

A top formation is in development. But this is a laborious process. The biggest rally of our lives, the likes of which haven't been seen since the spring of 1930 (and we all know what happened after that!) does not just reverse and come back down that easily. The first 15 percent of the sell off from the top will be met with numerous rallies triggered by dip buyers and short squeezes alike. While the market may very well plod even further up from here, it must be seen within the context of a larger topping process.

Tops, which like bottoms are culminations, are times of great volatility, not to mention we are entering September which will be a very mercurial month. There will be huge up days that will bring out the cheerleaders like Joseph with their new "price targets" and there will be large down days which will convince others that the seasonal market downturn is back in full swing.

More later...