The US stock market is ready to surge again but group-think is now a long term threat to prosperity.

Asian markets not on holiday generally closed higher with India up 1.8% and Japan up 0.8% last night.

European markets are up about 2.8% this morning. American market futures are up sharply as well.

Remember that the dangerous situation we faced in previous weeks was rapid market decline with low volume? That was dangerous because it indicated that the slightest amount of market cash outflow could be devastating.

The volatility index (^VIX) rose almost 25% over those three dangerous weeks indicating market instability leading up and through the inauguration. Now the situation has reversed. VIX has now settled back down and the market now at last has the ability to rise sharply on very low volume. The hedge fund hedging appears to have returned closer to the bull market level of less than 30% short hedging of a 70% long position. At this point hedge funds still could be forced into short squeeze buying if the market begins to rise sharply. That would result in the opportune time to take profits while letting a smaller investment position rise further. We recommend start taking profits in the 25% to 40% gain range and not be greedy.

Remember, our timing method does not pick a market top or a market bottom it selects windows of opportunity about the tops and bottoms when the market is whipsawing up and down preparing to change direction. There is also a lot of sector rotation going on at that time so one needs to be alert to take advantage of short term stock peaks and sell offs.

Current indications are that investors should probably not start taking profits for at least two weeks. As we have said before our indicators are saying market stability is getting firmer again so the bull market run probably will last at least through February and we can wait longer to sell.

Long term however, it appears the new administration is doing everything FDR did initially to turn a Hoover recession into the FDR depression. FDR recreated the corrupt government job spoils system that existed before Charles Lyman and Teddy Roosevelt put in the first federal merit system and purged federal career positions of incompetent and corrupt party hacks.

FDR even tried to stack the Supreme Court after he first took complete control of the House and Senate. It was only then that Americans began to get fed up with the power and corruption of group-think. Truman was selected as FDR’s last running mate not for intelligence or competency but because Truman was the only Democrat candidate most people still felt they could still trust because he was a loose cannon not a group think candidate. Truman was the last of that dynasty of central power… but control of Congress returned and lasted forty years until 1992 when we began our nation’s greatest growth period of productivity and prosperity. After that we returned to an unpopular group think congress and now we have two branches of government group think. Socialists just love group-think where everyone checks their brains at the door for the satisfaction of belonging to the group. That was what President Obama asked Republicans in Congress to do just yesterday.

Good luck on your investment journey.