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Added October 8, 2010

Markets normally, actually almost always, change direction in the direction not anticipated by the people in the market when sentiment reaches an extreme (i.e., if sentiment gets extreme in the positive direction, the market is ready to go down, and if sentiment gets extreme in the negative direction, the market is ready to go up).  The main exception in recent decades has been the stock market - because of the law against recessions.  In the stock market, when sentiment was extremely positive and the market should have been going down, the Fed blasted it back up again to protect the economy and so sentiment got even more extremely positive.  The net result was eventually a mania in stocks (in the late 1990's), sentiment being taken totally to the extreme in the positive direction, as far as it could possibly go (which is inherent to an exponential).  And then the Fed even cheated the exponential on the way back down (it kept the economy going).  Now we have another sentiment extreme among traders in the stock market in the positive direction, with the stock market now quite high again and at new highs for the move.  This cannot end well, especially since the Federal Reserve is not fully in control of the situation anymore (or the Fed would be getting more positive results for its efforts at reviving the economy than it is getting - which I predicted would happen).  It is only a matter of time before the stock market goes back down - a lot.