Dangerous Markets

In my last post, a while ago pre-vacation, I talked up AAPL's virtues.  Events proved this correct, in a funy way.  AAPL disappointed on sales and earnings, yet the stock is close to its all-time high.  IMO, AAPL is at best a weak hold now on a trading basis.  The fanbois are loving it that a new iPhone will be out soon.  LOL, that's a surprise?

If one compares the platinum ETF, PPLT, with the SPY for as long as PPLT has been in existence, and goes back to the platinum futures markets for prior history, one will see a close correlation between the two.  This has diverged over the past year or so.  Platinum, and even more so palladium, are priced on the margin largely because they are used in the real economy.  The ETFs are secondary in importance; they are not "money" a la gold and perhaps silver.  If the central banks were inflating everything so much, or about to, said inflation would include these very rare and essential metals.  I thus take them as proverbial canaries.  I "think" that stocks have been carried aloft on a similar mode as bonds.  If I saw real strength in copper, platinum, palladium prices etc., I would suppose that bonds were all wet and go with the growth stuff.  But I don't see that.  In fact, the last few months that the Billion Prices Project covers (up to June 30) shows no inflation.  (Note they do not cover services.)

The VIX was down today on a down day for stock prices.  This joins the metals in non-confirming the action.  Meanwhile, fundos matter.  The European recession, misnamed a debt crisis, continues on.  The sedative of the Olympics is over.  For some time I have been analogizing what's been going in in Europe the past few years to what was going on in the US beginning in about 2006.  Europe 2012 continues to have similarities to the US 2008 that trouble me. 

There have been a few times in my investing career in which I had an atypical sense that I was smarter than the markets or the pundits and actually was right (i.e. lucky).  In the 1990s, this sense was that the insanity would continue on until it didn't.  I was lucky to stay with the trend until 2000 and get very much out of stocks that year, to get back in in the spring of 2003.  In the summer of 2007, I got out of stocks and into cash and bonds around Dow 13000, and when it went to 14300+, I was untroubled.  A year later, it had been halved.

I have a similar feeling now about things.  As was the case in the US through August 2008, the markets were trading as if things were normal.  But they manifestly were not.  While the authorities were on the case, they were not gods, and they did the best they could.  But troubles are troubles, and Europe has troubles; and the US economy has continued to trail expectations.  The president's plans for the country to double exports in a five year span is not on track, as the ROW is not cooperating. 

The VIX is 14.  It is 1/3 below its 200 day sma.  14 on the VIX is support (resistance for stocks) for the past 5 years.  Either the economic news is about to turn sunny, or the VIX is overbought.  Right now, I continue to like ED and WGL over AAPL and the growth stuff.