There is no such thing as an underestimate of average intelligence. Henry Adams

This morning you will find yours truely deeply concerned - there is too much optimisme in the stock market now - let me give you a few pointers:

80% of all stocks in DOW trades above their 50 Moving Average... this has indicated crust in the past.

(Click on chart to enlarge)



and the Bull/Bear in same risk.....


The past week action must have been disappointing for the bulls:

• The G-20 was MAJOR SUCCESS --- right ?
• FASB - will help the banks--- right?
• Breaking 825.00 was key -- right ?
• Banks are back - right ?

On the other hand I note, as yesterday, that Switzerland going into DEFLATION is the worst news at all in this cycle - the mere idea that Europe/G-20 will face the Japanese disease is simply scary.

People forget DEFLATION will make credit even less available - as in an environment of DEFLATION the "real price" of lending goes up as deflation increases your debt burden- hence the low leverage of Japanese corporates.

Deflation is a tax on borrowing money, and the present model of VALUATION needs to be ditched as "free cash flow" analysis no longer works - this will make companies with debt even less worth and it will "contain" an expansion of successfull business' as their REAL COST of funding expansion is rising.

Even Greenspan & Trichet, the two people most in denial in this major crisis, realise if the end game becomes DEFLATION its over - and we will see 400 in S&P.... So... monitor Switzerland fight against deflation - if their policy tool becomes competitive devaluation it will merely export the problem......

All in all it the above indicators have made me slightly negative again, and I have initiated short S&P and DOW Futures.....as midday yesterday..... also still short EURUSD & Gold... while I took minor loss on the EURCHF..... I also reentered long EURSEK.....

Safe trading,

Steen