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Meet the New Bubble, Same As the Old Bubble

Daily Rap 10-06-2014

I have spent a good deal of time lately thinking about the financial environment in which we find ourselves. This weekend I had a change of heart to some degree about exactly how I would define the current landscape. As I was scratching out some notes I realized they were basically leading me to write a "letter" to explain where I think we are now and what action I plan to take. I hadn't set out to do any such thing, it just sort of evolved and I want to share it with readers.

Déjà Vu All Over Again To some extent this is a work in progress, as I will refine my thinking as we go forward, but it is a shift to some degree in that it is now clear to me that we are once again in a stock bubble, though I prefer to use the word "mania,"...more

Last year's posts for Ask Fleck

Q: Got to watch this rally closely. If it's weak (very narrow - essentially "The Dow" components) and "fails" over the next week or so, it might set up one of those rare crash scenarios. The big crashes in 1929 and 1987 were preceded by failed rallies - just an obscure note. Probably worth nothing but interesting, nevertheless. Meanwhile, the VXX (one of the volatility ETF proxies) seems to have carved out a big bottom and looks like it wants to go up. Somebody is apparently starting to buy some downside "protection".

Fleck: Thanks to Mr. Skin for that Friday morning followup comment regarding yesterday's rally.
(posted: 10/3/2014)

Q: Fleck,

"I wouldn't add to any of them until they stabilize or turn higher (which could happen very soon) unless you have a very small position. They are so depressed that if you pay up a little just to be safe, it really won't matter much, but AUY wouldn't be my first pick, though it is probably fine."

What's your definition of a very small position?

Fleck: 2% or less.
(posted: 10/3/2014)

Q: Robots showed up right on schedule: Well defined "oversold" right on the "key" trend line for the paid-to-play crowd's primary benchmark - SPX around 1940 - the 120-day MA that they have been "programmed" to recognize for the past two years. Of course, the other parts of the so-called "stock market" - like small caps, mid caps, and just about everything else outside a few key stocks in the "Dow" and SPX - well, they have already broken down. Russell 2000 in a "Death Cross" (declining 50-day MA BELOW declining 200-day MA). Big cap indices "should" rally from here - according to the "standard script" since 2009 - BUT if they don't, then maybe a few "thinking" players might hit their sell buttons - consultants be damned. Still don't foresee a crash at this point - unless some sort of "wild card" news event kicks off a "black swan".

Fleck: Mr. Skin's response to the rally on Thursday.
(posted: 10/3/2014)

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