Since the February lows the market has had an amazing turn around. HY credit has healed to November tights and the flow of new issue paper goes unabated. It will be extremely difficult for the market to roll hard unless we see financial tightening. I don’t get too excited about shorting a highly valued market. It can stay highly valued for a long time.
Credit is the spice that must flow in order for this rally to continue. I have been hesitant to get too bearish from the 4/20 high due to the slow dribble down and the lack of credit weakness. The market is at an inflection point and we need to see oil, credit and equites roll or the bears are in danger of getting run over here. I don’t have an edge and I am running light exposure. If we see more than nominal ATHs then bears may have to pack it in as they will lose the current bearish structure.
The fundamentals are awful but until we see volatility rise and credit weaken the bears need to hibernate. Now that I have typed this we should all expect a top and reversal tomorrow to show us all how bear markets truly work. Both bulls and bears get slaughtered.If you enjoy the content at iBankCoin, please follow us on Twitter