Rally squeezed every short again as hedge funds, sovereigns, and the fainthearted were left reaching for cover in an absurdly comical play of trend rebound. As stated here before the overall trend is still up and the explosive nature of rallies is leaving hedge fund and option boys bleeding. Once again we see that the world is priced in equities because that is shortest distance between two points. The first point being the slow spin downward in post WWII economic growth and the second point being what we imagine the world should be like. One is real, the other is OZ. There will of course be a mechanical price failure of world record proportion at some point as structural fatigue of the Fed asset price monster will collapse. But no one has any idea when that will happen.
There is however one asset price indicator which may tell us if the deflation slow growth pig is here to stay. IBM. Big Blue has had a virtual price collapse and represents the structural nature of corporate operations and job growth. Though the world wants to price itself in tech and in its the narrow nature and overpriced equity values, the real world is represented still by IBM and its combination of technology, broad employment, and practical world solutions.
IBM has come dangerously close to confirming a major structural price decline according to CoverRisk.com. A world priced in the technology of gadgets will suffer greatly if IBM falters.
