Sand Spring Advisors LLC
The New Era of Government, Debt Deflation,
& Weakening Consumerism
August 27, 2002
by, Barclay T. Leib
We have been quiet of late for a variety of reasons.
First, it is important that readers of this site understand that Sand Spring Advisors LLC also runs an alternative money management business that can occasionally lead me out-of-town for several days. In this instance, it was a summer-time visit to Boston.
Second, while I did peruse the charts on several occasions while travelling, little looked particularly new or compelling.
I thought about commenting on AOL when it reached price levels above $14 as a potentially ripe time to take some profits on longs, but having mucked up the entry into that trade prematurely at 10.43, I wondered if many readers would actually still be long this stock and care. In the end, I thought it bad form to comment on a long that many got stopped out of.
On August 22nd I thought about commenting on the huge Full Moon and whether that day might potentially mark the end of an A-wave up within a larger A-B-C corrective period. But then I opened an e-mail from an irate reader who chastised me for "the worst call that he had ever seen" in my premature August 10th post suggesting that 923-932 would likely be a topping region in the S&P -- even though I mentioned in that Chart du Jour that there were yet further levels of more significant resistance above there, and that the potential path that I was suggesting was simply a tentative guess at short-term price action -- a guess specifically made at the request of yet another subscriber with some near-dated options expiring. I then promptly shut down my computer and wished that I had not tried to answer the first reader's query at all, since by doing so, I had opened myself up to such rage by the second. Are free posts and commentary on 60-minute charts even a good use of Sandspring.com's time? I have specifically tried to avoid such in the past. I have now resolved to generally avoid such in the future unless a situation or pattern is truly compelling.
Lastly, a subscriber-only article was overdue, and I have spent some time putting it together. This article is entitled "The New Era of Government, Debt Deflation, and Weakening Consumerism" and is accessible to subscribers by clicking here. The article is reasonably long-term in nature and tries to inspect the Fibonacci rhythm of 10-year Treasury yields back to 1925. It specifically prognosticates on the implications of the 10-year Note chart below that has just poked its way to new all-time highs. Three thrusts up to a high, or the beginning of something even bigger? Or maybe a temporary down-move is in the offing, with significant new highs down the road?
Maybe it's time for free-loaders on this site to pay up, and get 10-pages of commentary instead of the small bits and pieces offered publicly.
As an adjunct to our discussion of 10-year note yields, we also end up spending some time within the article discussing some large consumer goods retailers such as Procter & Gamble, Wal-Mart, Sears, and General Motors. Anyone long any of these stocks (P&G in particular) as perceived core "safe" blue chip holdings should take particular note of this analysis. If Enron can go from 90 to zero, P&G could easily see its value shaved in half given the deteriorating business fundamentals we see here.
Non-subscribers are invited to sign up for our premium level of service below, and gain immediate access to our August 25th commentary entitled "The New Era of Government, Debt Deflation, & Weakening Consumerism." Access to earlier Sandspring.com analysis, as detailed below, is also provided.
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