I don't mean to be sanguine, but Wall Street is a rose colored glasses kind of place. Something will take the stock market down eventually, but don't hold your breath or bet aggressively for that day, whenever it comes.
The market is making minced meat out of the bears. S&P 1350 soon? Support held Monday, no doom and gloom. It's odd bot business as usual on the street. I don't believe in it, but you'll have your head handed to you shorting the market. Profit taking perhaps on Wednesday, but the pressure and momentum favor the bulls in spite of a future of food inflation problems and other economic woes to come (eg. pensions, states, etc).
Deficit reduction. Sham. Washington remains so full of b.s. that all of their eyes are dark brown. As far as I'm concerned it's a big toilet stew down in DC from both sides of the aisle. There needs to be actual debt reduction, not just spending cuts. There also needs to be reform of many systems to enable real economic growth, not this nutty federal spending stimulus that's been on going. All it has done is saved the banks for a while longer, given us tepid GDP growth with little employment gain - the list goes on and on. The politicians are still in a spending state of mind ultimately. Even if we saw a boost in tax receipts from a stronger economy, inside the beltway would find a way to spend any new revenue gains. Reduce the debt in the face of $100 trillion in unfunded future obligations? This cycle of unbridled spending and dollar creation will only continue. As a result I am bearish on long term dollar prospects even if we see a 2011 rally as seems to be shaping up. My feeling is the longer the dollar is propped, the worse the fall will be when the bottom falls out.
Gold. Holding pattern to perhaps a bit lower. I will be more alarmed if $1300 area is broken. The dollar continues to get the benefit of the doubt in times of crisis and that can hurt us goldbugs a little bit. For now it's as if the gold caravan is stuck at the railroad crossing, gates down, red lights blinking, as the dollar train takes its time moving through. Ultimately the dollar train is on a track to a big cliff, but for now it's chugging along. Don't bet against this dollar scenario. As always, I favor the hard assets. Buy rare coins. Even look at rare currencies. Speculate in the paper instruments like ag and metals futures only if you know what you are doing. The volatility presents good opportunities. ETFs of varying types in stocks, oil, commodities, also present some good plays, but know the risks well.