Is there a Bullish case lurking out there that we're not recognizing?

Came across this article last night regarding the Arms Index reaching an extreme:

ARMS Index at 13.22.

ARMs Index explained

Arms said:


"The value for the day on Friday was extremely high. According to the Wall Street
Journal it was 13.22. They used the following components:Advances 315, Declines
2839, Advancing volume 13,602,600, Declining volume1,621,066,016.I have gone with
this since the numbers I got from other sources were obviously completely erroneous.
Sometimes, as in 1987 particularly, there is a lot of confusion.But watching the numbers
during the day on Friday, I think the WSJ must be close.

That makes this the fourth highest reading in at least the last seventy years, which is as
far as I can go back. On the chart above I have shown the daily readings going back to
1987, with the horizontal blue line at 10.00 for reference.You will observe that the
extremes such as we saw on Friday seem to come in at bottoms.They represent a sudden
rush for the exits, such that the declining stocks are receiving ten or so times as much
volume as the up stocks.In other words, the crowd mentality has taken over and stocks
are being indiscriminately dumped.It is a sign of fear and panic, and appears, in most
cases, to be misplaced fear, at least on the short to intermediate term."


So.. Does that mean we're putting in a short term bottom with a rally towards this year's previous highs, thereby forming the "right shoulder" on H&S many have been seeing being formed, or could it lead to even higher highs, suggesting we're in a new Bull Market?

I don't know. As stated in previous posts, I remain overall bearish given M3 and that 10 years "Mother of all H&S" formations I've been seeing. But the reality is that if I can see it, then the Fed and Treasury can see the same thing and might be trying to orchestrate a global effort to break the technical "waterfall" that occurs when those right shoulders collapse below the neckline price.

DOW H&S formation.

We remain in an inflection point in the markets, with a currently bearish bias. But that doesn't mean the rallies can't come fast and sharp back up to critical resistance points. It will be interesting to see how much of that resistance can be overcome.

Which brings to "positive event risk" (for the bears). What lurks out there that could dramatically reverse this market to the upside?

The primary event that might make me turn bullish again, would be firm regulation and control over Credit Default Swaps, which are destroying the Capital markets.

Secondly, would be a concerted jobs program to spur re-hiring in the PRIVATE SECTOR (not public). We need to rebuild the demand curve in this economy and that can only come if we have more private workers than we have public ones. Because extended unemployment benefits are nothing more than a fancy term for Welfare, it would have made more sense subsidizing small business to retain, retrain, and hire workers, if only to avoid people losing job skills.

Certainly Europe stabilizing would be nice.. but I'm not counting on it.

That's about all I can perceive that would change my mind outside of the return of the Messiah.. ;0)

Scrutinizer