Excerpted from the August 15th edition (#46) of Notes From the Rabbit Hole

Think about it for a minute. A newsletter writer gets bullish in Q4 2008, sees the up move stall as a couple early warning moving averages are violated. The writer pulls back into caution mode. The ensuing global market decline finds new lows into March 2009 in some markets and higher lows in others - with bullish divergence aplenty and terribly morose sentiment supportive of a bullish case. The writer is again bullish.

Now here is the thing; NFTRH forecast the rally to be born of and sustained by sentiment. Upside targets were established and I thought that hope would spring eternal at the turn of the new year:

"The question is, how long can 'hope' be held down? No matter how bad things are - and they are very bad - there is bound to be a technical reset of human emotion. I have been bullish for several weeks now in anticipation of this reset hinted at by the pervasive bearish sentiment and bullish divergence on most stock, market and asset charts. But it is just that, technical. Sad to say that the hopes and dreams of millions can fall into the category 'technical' or 'sentiment' indicator, but that is what is happening in my view."

Again, a short time later NFTRH was compelled to temporarily suspend this bullish view, but by the time March rolled around with its major bullish divergence, sentiment lows and 'higher lows' among leading markets like the Hong Kong Hang Seng and big tech Nasdaq 100, it was time to strap in for the inevitable correction in human sentiment. We are there.

Back on the segment's theme, NFTRH's proprietary contrary indicator is me. At least I am using myself that way. As you know the technicals have forced me to begin charting parameters of a potential new bull market. Reference has been made to 2003, which I vividly remember as the pre-biiwii Gary, bearish the fundamentals of the stock rally dealt in the reality of the price action, which was really just Greenspan and the Bush administration's inflationary policy at work, expanding the credit/debt dynamic to dangerous levels (as opposed to today's thermo-nuclear levels). In essence I thought to myself, 'you wanna play bull? I'll show you bull and outperform your tepid gains by a country mile'. All the while I employed rigid risk management to trading the 'inflation bull'. The Dow-Gold ratio was invaluable in showing traders where the real gains were likely to be had.

Today we find respectable luminaries like Richard Russell compelled to obey a Dow Theory bull signal, other respected analysts who were previously bearish, flipping the switch, and of course the major media and dumb money (later in today's report we excitedly debut data from Sentimentrader.com) on the lurch toward over bullishness.

While I remain short a couple markets and have thus far called 'no bull' until our monthly chart (also shown later in the report) confirms, consider that a person who coldly called for a 'technical reset of human emotion' would be a tough one to turn. I have been wrangling with the issue lately, and if the bull does indeed turn me - well, don't say you were not warned. ;-)