No market goes up in a straight line. Not even a Fed fed 50 basis point rate cut market. Marty Zweig said thirty years ago, "Don't fight the Fed" and he was right. But I never heard Marty say "...and therefore the market will never correct." On the contrary, disciplines become more important than ever when markets run hard in either direction. 

I recently wrote that the FOMC meeting on September 18 would cause a sea change for the stock market. I believe that is exactly what has occurred. But not all of those sea changes are bullish. The potential for much higher inflation is undeniable. The weakening dollar and higher oil prices are at historic levels. The disclosures of deeper sub prime exposure by banks, brokerages and hedge funds are virtually a given and that is to name just a few of the problems facing the U.S. economy and the stock market.

Gold is not hitting a new multi-year high because of jewelry demand. Bonds have not reacted so aggressively because of a strengthening domestic economy. Those 50 point cuts on the Fed funds and Discount rate scared the hell out of the bond market. Were it not for exports, we would be in a recession right now. The housing market has made that abundantly clear. As I mentioned last week, eight out of the last ten recessions were preceded by a housing boom and a subsequent housing devaluation.  

So, Yacht has turned bearish. No, I have not turned bearish and I have not turned bullish. I have turned neither because I am, as always, neither bullish nor bearish. I simply take what the market gives me. I don't form a market sentiment, I utilize market sentiment. I am patient. I strive to be consistent. I work hard to be persistent and I always try to be loyal to my objectives and perspectives.

Just as in football or golf or any other sport you wish to name, you utilize to your advantage what your opponent or the conditions of the game are giving you. If the defense is set to stop the pass, you run the ball. If there is water behind the green, you take one less club and play up short. It's the same in any business. Patience, consistency, persistency and loyalty are the keys to success. Ignore any one these attributes of success and you will lose. That I can guarantee. Maybe not this week or this year but you will ultimately lose the game, whatever that game may be.

Patience is the antidote to emotion. Emotions in the market are fear and greed. Emotion is the basis for bad decision making and bad decision making is the key to losses in the stock market or any other business. Patience is discipline.

Consistency is the ability to repeatedly apply what you have learned through experience, developed through trial and error and tested in actual application on a constant basis. I think of my investing disciplines as the ultimate test of consistency and therefore, patience. When I fail to follow my disciplines consistently, I invariably lose money.

Persistency is dogma. It's never giving up. It's staying in the game even when the game isn't fun that day or every position is moving the wrong way. Persistency allows you to win even when self-doubt tries to creep in. It's the discipline to force yourself to remain patient, to consistently follow your disciplines and remain loyal to your values, objectives and long-term perspectives in the market and in life. It's a system of principles that must be established and followed everyday and without exception. Persistency separates success from failure.

Loyalty is the ability to not just think about you. Loyalty is the ability to set aside your personal desire for immediate success and the instant gratification of profit in the stock market or any other aspect of life. Loyalty is a perspective that is mandatory for success. It's the "I'm just looking out for me" attitude that I have seen cause so many talented athletes, traders, businesspeople and personal relationships to fail. Loyalty is the ability to look out longer-term at the bigger picture and put patience, consistency and persistence to work. Whether it's establishing your personal priorities, your investment objectives, implementing your business plan, or following your stock market disciplines, loyalty is a perspective that influences your trading as well as every aspect of your life.    

So no, I have not turned bullish or bearish. I remain consistently agnostic. A stock market agnostic that will take what the market will give me while I remain patient, consistently following my disciplines and persistently trying my best to be loyal to my perspectives, objectives and the longer-term big picture which has proven to me to be one of the most important aspects of successful living and investing.

Successful investing also requires constant reevaluation of the over all market picture. At every moment the market's overall big picture is telling the real story. Markets do not move in a vacuum. It's not just about the next stock pick. It's an understanding of the numerous market variables that interact and correlate with one another to create the market's overall picture and future direction.

Any investor who has placed their hard earned money at risk in the markets should be able to take every bearish argument I listed above and answer them with the bullish response. That's what makes a long-term successful investor because that's what makes the market move. The constant push and pull between the bearish and the bullish arguments is what moves the markets and establishes the momentum and prices of stocks.

Sure, the weak dollar can be bullish for stocks as take-over bids from foreign firms and corporations increase and our multinational companies benefit across the board. High oil prices are the market leader when sectors like agriculture, machinery, mining and infrastructure are in demand. Higher "potential" inflation is no reason to hold back economic growth with high interest rates. All sound responses to the bearish arguments.

So we are once again at the point where it would appear the bullish arguments balance the bearish arguments and vice versa. As we constantly evaluate the market we have to search for variables within the market that provide insight as to where we are in the market's ongoing cycles and where we may be going as the market performs it's task as a discounting mechanism for a stream of future earnings. They may be fundamental aspects of the market, quantitative models, technical aspects that allow numerical or visual analysis of market price, volume or any number of other different variables used to evaluate the markets and their components.

At this point, after the run we have had this past week, it would be difficult to argue that the market is not extremely overbought. That by no means implies the market is overvalued or cannot move yet higher. These indicators are not always correlated and can be at extremes in totally variant directions for prolonged periods. An overbought market may still be undervalued; just as an oversold market can simultaneously be overvalued by any accepted metric.