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11/29/05 0900

Good Morning: In yesterday's post-holiday selloff, reminiscent of the first trading day of 2005, stocks sold off sharply from the open of the post-Thanksgiving week. Prior to this early jolt, Global Stock Markets had continued their epic advance through Thanksgiving Holiday, before finally rewarding the skeptics who were saying this market has gone too far, too fast. The problem approaching any big number like Dow 11,000, is it rarely repeats previous performances and so instead of breezing through this important milestone like in the past, the market stopped dead in its tracks right at the threshold. Notwithstanding, the electro-magnetic pull of a really big number is hard to overcome in just a day, although the similarities to the opening salvo of January 2005 are a little worrisome.

If Monday turns out to be just a pullback and Monday's highs end up being exceeded, it could still lead to another fairly explosive upmove. Last week Copper suffered an equally if more severe selloff and quickly came roaring back to set new all time record highs.

We did actually express caution regarding the post-Thanksgiving tendency for the market to sell off and sometimes such selloffs can extend over a two or three week period until around early to mid-December when the market becomes somewhat re-invigorated and more often than not rallies strongly into Christmas and year end and in spite of the suddenness and apparent severity of Monday's pullback, it does not necessarily detract from the positive backdrop that has thus far justified our clarion call that we could still be at the forefront of an epic advance in the same mold as what happened both a Century ago and a half Century ago, when the Dow Jones rose almost 50 fold from 1955. Famed Economist Arthur Laffer's assessment of the situation is much in line with our own thinking that stocks are actually lagging the economy and corporate profit records are just so off the charts, stocks are incredibly undervalued and as a consequence are playing catch-up and as we have been saying for some time, for these reasons and a great many others including the fact that we are in a long-term era of low interest rates which could extend through the much of the next decade, and as we've already compared on numerous occasions with the 1950's through the late 60's. Moreover, we may have a new ally at the Fed who understands the stimulative growth power of low interest rates and as other commentators have already well noted, Bernanke is unlikely to play Greenspan's game and more likely will deliver the endgame of the Greenspan Era, with his own brand of Fed Theocracy and try to maintain the near full employment conditions that currently exist and deliver on the perennial promise that everyone one who needs a job should be able to find one, that is the best way to maintain robust economic growth and therefore as we declared last week, we have potentially rarely if ever, been better positioned for a mid-decade lift-off than right now.

Our Dynamically Bullish call on the Global Market Advance may have overshot a bit along with the US markets Monday, as the Nikkei index neared our next objective target of 15,000 and the Mexican Bolsa nears our 12 year target of 17,500 almost 2 yeas ahead of schedule. Falling just short of these two objectives could precipitate a correction over the coming days or weeks ahead, but it is still pre-empting continued strong economic growth Worldwide thru most of 2006 as evidenced by the breathtaking pace of development going on in leading edge economic hot-spots like Shanghai, Dubai and the UAE and more recently the upbeat tempo in Japan and run-up to the 2008 Beijing Olympics is a testament to the gathering momentum and pace of development Worldwide.

Precious Metals have continued their relentless run higher over recent weeks with Platinum maintaining the $1,000 per ounce barrier overnight and putting it well within $100 of all time record highs. Palladium is again challenging recent highs and Silver has been stellar as it continues its upward agenda setting new 17 year highs overnight. The Gold outlook is looking increasingly bullish on the back of our dynamically bullish proclamation of a few weeks ago. The 5 year Gold chart looks dynamically if not relentlessly bullish, a particularly promising omen for a sustained advance to significantly higher levels that is starting to build real potential for what could result in a parabolic uptrend or blowoff of some sort and if this occurs could blow through our target range of $550 - $600. Not to leave Copper out of the explosive metals scenario, the red metal soared to new all time record highs overnight of $2.02 per lb.

Yesterday, in an unusual about face, the Currencies rallied strongly off an oversold condition and basing out over thanksgiving. The fact that they rallied so strongly is indicative that we may be nearing a turning point of some significance. Grains also rallied a little.

Trade Well
From the Desk of Savant

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