Who is Buying the Dip?

Any analyst that sees the Dow at 11000 anticipates professionals moving funds out of commodities into equities. The retrace in commodities will give equities a fundamental support because it supports economic recovery over the deflationary trend.

The mass movement of this wholesale capital is short term, however. It creates a sucker's market at the retail level, then it will be time to massively move back into commodities and support the deflationary trend.

Key to predicting the trend and the timing is who owns what when.

Who is buying the dip is critical to predicting the movement of mass capital (capital that is consolidated into "too big to fail" and thus becomes the predictor of a trend's direction and timing).

For the professional, the retail money is whatever is added to the pot. The retail money is easily indicated and signals a buy or sell reversal to consolidate that money.

Predicting rather than following the trend is a winner for the small, independent investor and also indicates the efficiency of democratic, demand economics.

A free market system is not the consolidation we have now, and that concentration of power and wealth is falsely attributed to free market mechanics to justify the inequitable, and destabilizing, outcome.

The instability we have now, whether banking, energy, health care, is attributable to the lack of a free-market mechanics in operation. The proponents of consolidation argue the value of minimizing risk when, empirically, the risk was systemically maximized. Technically correcting for the high risk probability of 100 percent required a $15 trillion government investment to "save" the system the way it is; that is, supporting the risk into the future and clearly indicating the long-term trend.

Who is buying the dip? The question begs to ask, who is in control? Without ensuring a democratic plurality in the marketplace, the economy fails the free market legitimacy. The failure is empirically indicated by the cost (benefit) figure of controlling the externalities, the largest of which is the systemic risk, and the most beneficial dimension of incurring that risk to the consolidation of the capital is high unemployment.

What would trillions of dollars to directly bail out the millions of unemployed rather than assist the consolidation of the financial sector do for economic recovery? The reason it does not happen that way is not because it MUST come down from on high, but because unemployment provides for the consolidation of the wealth. This is where the accumulation is paid for and, subsequently, the employed pay for the distribution--the cost of the recovery--as well.

Wages and salaries finance the retrace of the macro cycle (the crises) of accumulation and distribution that consolidates the wealth, and political power. The People finance, empower, the secular gods who decree "the way things are," or the natural order of things, from on high with the force and legitimacy of public authority. Questioning that authority is tantamount to a secular heresy worthy of a popular inquisition of fundamental values in which righteousness is decidedly conservative.

Just because the benefit, the payoff, of the risk taken is not analytically recognized to be connected in a causal relationship does not absolve the analyst, or society, from the truth. The truth persists in spite of its perception and a false sense of pluralism will assuredly, empirically, result in crises.

Identifying the trend is everything to do with recognition of the truth. Who is buying the dip and supporting the bullish trend in equities? If it is a consolidated capital looking to further consolidate the wealth, it is not a bullish trend at all but an extension of the accumulation phase of the business cycle.

Small, technically shrewd investors that have avoided consolidation of net worth, the time is nigh. False technical indicators will be the small investors' undoing unless they are willing to recognize that pluralism, not consolidation, ensures the profit of their long-lived prosperity and the production of wealth.