This tale begins in the month of July, in a small town. The weather is pleasant but with averaging one visitor a month the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist comes to town. He enters the only hotel, lays a $100 bill on the reception counter, and asks for a meal and later goes to inspect the rooms upstairs in order to pick one. The hotel proprietor takes the hundred dollar bill ^(http://www.ucontext.com/cbhop.php/4314/0/bfde2c65d73d4d5869246bcab6b9f0a1/takes+the+hundred+dollar+bill) and runs to pay his debt to the butcher.

The Butcher takes the 100 dollar bill, and runs to pay his debt to the rancher. The rancher takes the hundred dollar bill ^(http://www.ucontext.com/cbhop.php/4314/0/bfde2c65d73d4d5869246bcab6b9f0a1/dollar+bill) and runs to pay his debt to the feed supplier. The feed supplier runs off to pay his debt to the gas station for his fuel costs.

The fuel merchant owns a debt to the town prostitute who, because times were hard, offered her services on credit. With the $100 in hand, she runs over to the hotel and give the owner the $100 bill to pay down her bill for rooms she had to rent for past clients.

The hotel proprietor then lays the hundred dollar bill ^(http://www.ucontext.com/cbhop.php/4314/0/bfde2c65d73d4d5869246bcab6b9f0a1/hundred+dollar+bill) back on the counter so that the rich tourist will not suspect anything. After finishing a great meal and feeling refreshed he pays for the meal with pocket change and foregoes inspecting the rooms. Feeling energized and seeing the storm clouds lift, the rich tourist takes his hundred dollar ^(http://www.ucontext.com/cbhop.php/4314/0/e32a9188298e637bcc929f533f3ccd66/hundred+dollar) bill and leaves town.

The story behind the tale is that, since everyone in the town was in debt, just the mere circulation of money with no real wealth created in any ones pockets, allowed for bills to get paid and improved everyone’s balance sheet. No one put money in the bank but progress was felt.

Now the story gets more interesting. The stranger tells others about what a great town he discovered and about the tasty dinner he experienced. The local newspaper picked up the story. Later in the month, when 7 new tourists arrive and take rooms, the hotel proprietor senses a change. He begins planning raising his room rates, perhaps even adding some rooms sensing a future upsurge. The rancher wants to raise his cattle prices because of the increased demand. The feed and fuel supplier is thinking along the same lines. And, let’s not forget the prostitute who’ll have to charge more because room rates increased.

What has happened is that liabilities transferred from one balance sheet to another. As everyone knows, paying debts keeps money in circulation as long as the debts remain in place. Once they are paid off, new borrowers for loans need to be found. But when “green shoot” optimism begins to reign, everyone wants to raise prices. And the race begins unless monetary policy tightens money supply. If you chose to fly ahead of impending news, get your Wall Street Journal subscription ^(http://www.wallstreetjournalnews.org/) today.

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Well it could be that the Labor Day has come and that’s when most of the Wall Street Movers and Shakers come back from holidays, the other reason that for the past couple of moths the stock market has been consolidating. You might have noticed how you’ve been in and out of the market and seeming not to be making much money.

The other day in the blog I wrote about a Dead Cat Bounce; perhaps that was just an indication that the market is finally going to trend, but which way. If we knew that we could all make millions very quickly.

I’ve also talked about tuning into what people are thinking and are likely to do. Well the last three days are making me think that perhaps the thinking is “hey we are a bit tired of this going nowhere it’s time make some money” sort of thing. One of my pet indicators is turnover and we’ve seen a good bit of that this past week. So I think the signs are bullish but I’m not jumping in and buying just yet. Rather I’ll look forward to making some money on the stock I bought while the market was down. You do the same don’t you, ‘only buy when the market is down’ I hope so.

This is also a time to be very careful on how you interpret the signs, for we should not forget that a lot of people are now using ‘Trading Programs’ to try and make profit on a daily basis and I feel it has an influence in the market. If your watching closely you can see these extreme overbought and over sold indicators. So it is a matter of learning to see the actions of people to confirm the trend not try to anticipate it. It could also be a time to forget a lot of the old rules of trading the market.

These of course are my thoughts on the matter and are in no way an indication of what you should do. As I always preach, do your own research and get advice from your professional adviser if you like.

Want to learn more about trading the stock market ^(http://www.ucontext.com/cbhop.php/4314/0/b772fb491a5a9fd4d1e32f0b9d581f4c/stock+market) “Expanding Wealth.com”

P.S Watch this very interesting video “Is this you”

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