The Story Goes Something Like This…

2,921 views

Five years into the Obama Administration, many wonder how this “Community Organizer” came to the place where he has had nothing to say about the Federal Reserve’s “Royal Scam” of printing trillions of dollars for the Banks and Wall Street to enjoy. My DC sources tell me that there was a conversation between the then new Treasury Secretary, Tim Geithner and Obama the day after the Inauguration and it went something like this:

Scene: The Oval Office. Obama sitting behind the big desk feeling both confident of his achievement yet scared about the financial goings on in the world at that moment.

Obama: Hey Tim, these banks are really pricks. They destroy the world of finance, force us (the government) to bail them out, and they won’t play ball. What do I do with them? Let’s put these cocksuckers in their place!

Tim: Congratulations, Mr. President. You’ve accomplished what few men ever could. Feels great, I bet. But I’ve got to burst your bubble a little bit now, sir as we’ve got some real problems.

Obama: Burst my bubble, Tim? That won’t happen! I’m on cloud nine and we are gonna clean house. Tell me what we need to do to own these fuckers and I’ll do it!

Tim: Let me ask you a question; Do you want to be the President who presided over the Greatest Great Depression where the world completely falls apart? Do you want to be the man who presides over the obliteration of the worldwide banking system as we know it? Do you want to be the man who single handedly took the American way of life and dumped it in the gutter?

Obama: Is this a rhetorical question, Tim?

Tim: Or do you want to be the President that took over this country, that is swimming in a world of shit, and cleaned it? Made it shine like a motherfucking diamond? Would you like to be remembered as the President who presided over the greatest economic comeback, a miracle!, in the history of the financial world and to preside over one of the greatest stock market rallies in history? Hmm? What’s it gonna be, Mr. President?

Obama: Again, with the rhetorical questions Timmay! The answer is obvious! Now stop fucking around and get to the point. I’ve got a lot I can do here. Programs to help the poor. An entire infrastructure to rebuild. Peace to make with our enemies. Come on!

Tim: Do you really want to know what you should do? What you must do? You won’t like it, Mr. President. You won’t like it one bit. But if you don’t do it, you will be remembered as the worst President since Herbert Hoover.

Obama: Go on then.

Tim: Well, the first thing that you’ll have to do is to shut up.

Obama: Excuse me?!

Tim: That’s right. You must not say a word when we give banks and Wall Street an endless treasure trove of dollars. When we give them trillions of dollars.

Obama: What the fuck are you talking about? I’m not giving one red cent of Taxpayer money to those bastards.

Tim: You won’t have to. Not one red cent! That is the beauty of the situation.

Obama: Go on…

Tim: As you know, Mr. President, I was the Chairman of the New York branch of the Federal Reserve, you know, those guys who regulate the money supply.

Obama: You mean Greenspan?

Tim: He resigned just before the shit hit the fan. Perfect timing, huh? It’s now his hand-picked successor, Ben Bernanke.

Obama: Oh yeah. I remember. He’s the guy who said  the housing mess was contained and there would be no financial problems or recession!

Tim: Right. That’s the guy. But I told him to say those things to delay the financial panic. He knew exactly what was coming but was under my strict instructions to falsify in order to avert it. It eventually cost the taxpayers 700 billion dollars anyway. In fact, most of his “facts” that he speaks publicly will be untruths designed to build confidence in the financial system. Mr. President, aside from using raw dollars to meet our goals, the most important thing that must be bought is confidence. Confidence in the economy, in the banking system and most importantly, in markets.

Obama: Using “raw dollars to meet our goals”?  Where the fuck is this money going to come from, Tim? And what exactly are we going to be doing with it?

Tim: Not us, Mr. President. Them. The Federal Reserve and Chairman Bernanke. They will create the money out of thin air. That is their job! It will show up as a debt on their balance sheet. Not ours. Not the governments. not the taxpayers. Theirs.

Obama: I don’t get it. How is this money going to be used? Shovel-ready projects? Are we going to buy houses from the Foreclosed upon? Give the money away? What!

Tim: We are going to buy shit, Mr. President. They will be deemed “investments” as it will be the shitty housing paper that banks fucked themselves with. Maybe we can get them to buy some government debt as well. And the beauty of it all is that there will be no government involvement, no government oversight. Nothing. It is not required according to their mandate. A committee will make a decision and it will be implemented using freshly minted money. No Congress, no Senate, no Republicans, no Democrats. I promise you that if you keep your mouth shut, everyone will too. It will work to everyone’s advantage who has capital or access to capital.

Obama: What? No oversight? How is that possible?

Tim: Easy. Did Greenspan need approval to lower interest rates? Nope. Bernanke won’t need approval to add debt to the Fed’s balance sheet. They’ll just print the money, buy assets in the marketplace, prices will rise and everyone will be happy again. But it will take some time and a lot of money. And that money will find its way in to the stock market.

Obama: How much time, how much money? And why the stock market

Tim: At least to the end of your first term, Mr. President and certainly trillions of dollars. The stock market is the only true arbiter of confidence in this country. Companies won’t spend or hire when their stock price is down. Consumers won’t spend if their retirement accounts are down by half! It is the most public and easily manipulated barometer of the economy, even though it really doesn’t reflect the economy. Really, it  just helps those who already have the money come to the realization they could and should spend and hire.

Obama: So let me get this straight. If I just shut the fuck up about giving trillions of dollars to the fuckers that brought us to this fucked up place in our financial history, everything will be fine?

Tim: That is absolutely correct, Mr. President. The building blocks are already in place. Everyone is already on board. All I need is your approval and promise to NEVER SAY A WORD ABOUT THE MONEY, ever.

Obama: I don’t like this, not one fucking bit. I’ve got to go against everything I believe in as a human being. But I guess that’s what one must do when they become the most powerful person in the land. If it is that easy, then you have my word, Tim. And if you are right, you can retire at the end of my first term to fame and fortune. But you better be right or I will blame it all on you. And you will go down in history as the worst Treasury Secretary ever. Got it? Now get outta here! I’m planning a trip to the most stable Islamic country in the Middle East, Egypt.

Tim: Yes sir, Mr. President…Thank you, sir…You won’t be sorry.

 

All Rules Suspended Until Further Notice

558 views

The rules of most everything as we know them have been changed since the latest economic crash. The very foundations of our civilized society have been adapted to the needs of the monied status quo. Government, banking, materials, employment have all been inexorably altered to suit the current environment. And within the parameters of the new normal, pure falsehoods are perpetuated as truth. Outright lies are OK and deemed the true reality. And this goes for almost all aspects of our artificial financial complex and eavesdropping government controllers.

Why do we need to analyze anything? For markets, all that matters is the “stimulus”. There are no consequences as long as those who control the capital say so. Sure, we can speculate on individual stocks or “play” them in some way. But the fact is that an uncontrolled entity with no oversight is printing cash money and buying assets with it to the tune of billions and billions of dollars every day. In fact, the ten largest hedge funds on earth have assets under management roughly equal to just four months of this artificial stimulus. It is not normal market function it is something else entirely. And few really care as long as the game continues.

I recently got into a small twitter debate about the scheme of things nowadays and I was told to just suck it up and play within the new, identified parameters. The truth is that I find it difficult to suspend my disbelief in order to participate fully in this artificial schema, though I do own old man stocks from the past few years at considerably lower prices.

The question is continually asked about how this free money regime will finally end. I don’t know. No politician will have the guts to order it. No banker will have the stones to say enough. No regulator will have the power to end it. As long as it benefits those with capital, it cannot stop until some larger crisis develops. And I don’t know when or how it will be. Just that it will eventually be.

So in the meantime, listen to those who have been successful finding the cleanest crap out there and follow.

I am a Bad Man…

542 views

Yes, it has been a long time. Too long in fact since I’ve made my thoughts public about the current state of the market.

Needless to say, I’ve got a lot to say. But it will have to wait a little while longer.

I’m taking care of some “issues” that arise in one’s “late youth”. If I make it, I’ll have a lot more to say next week.

I promise…

A New Leaf. NOT!

647 views

They brainstormed. They cajoled. They Jawboned. They printed.

This has been going on for over four years and during this entire time the “money” stayed locked in the closed loop of the financial/investment system and sent the prices of assets ever skyward. And during all this time, the economy and everything related to it was subject to the disclaimer of “weakness”. Housing, credit creation, employment, production, consumption, spending. Anything you can think of was “weak”.

Then, suddenly, after months and months of obscene amounts of stimulus “money” pointed directly at banks and government, the major averages made new all-time highs. That’s right, as “weak” as everything was, markets made new highs. Some say it is the markets discounting better times ahead. Others say it is a recovery in corporate profits.  Others attribute the rise to the Feds stimulus. But most non-finance people have no idea why the market has done what it has done. And if you ask them about the Federal Reserve and the stimulus, they have not a clue as to how, why or how much.

I’m not bemoaning  these new highs because I think they are contrived or for any other reason. But what I have noticed is that now that markets are here, at all time highs, all the “weakness” has remarkably disappeared. It’s like someone flipped a switch or turned a page. All of those bad mortgages and underwater homeowners. All those unemployed or underemployed, vuala! it no longer matters. As the markets rallied, no negative news mattered. It made no difference that nothing was really improving, simply a stabilization at depressed levels. Now, its all good and if you are still having problems then you must truly suck.

Now the Japanese have gotten into the act. Their markets and currency are on a wild ride, greatly upsetting everyone in their region but producing (up until last week) some serious one way action.

I’m not sure what the point is in this exercise other than to vent about how we have spent ridiculous amount of wealth on nothing but keeping the government afloat and saving the balance sheets of the big banks. Plus, the creation of the thirty million dollar condominium apartment in Manhattan. Not one road has been fixed with all this money. There has been nothing, NOTHING done with all this insane amounts of capital other than to buy government bonds and MBS. BTW–the quasi-government agencies buy every new mortgage originated no matter who does the origination. There is only Fannie, etc.

And to make matters even worse, all the money used to buy MBS paid “full boat” and then the sellers (banks) hypothecated the money times 10 at least. So now we are levered to the hilt, again.

And they are not going to stop. They simply cannot.

So what about all those people left behind, the ones that don’t have a multi-million dollar pied a tier in Manhattan, a McMansion in the tri-state area and a beach house?  Well, you’re screwed because the government, media, banks, and the markets say that its time to move on up. Don’t get left behind!

Constructive Until The End…

556 views

After the failure of the Federal Reserve to truly stimulate the economy with trillions of dollars, the equity markets have done the heavy lifting. Because the stock market has rallied again past every historical norm, investor confidence has re-emerged, all in the space of one historic month.

One month of sustained gains has changed the picture everywhere. Most now truly believe that the problems and malaise that were evident as recent as last month have been nullified and that it is clear sailing regardless of the facts.

During this past month, the S&P 500 index has moved up over 125 points or over 8%. This gain comes after a rally that began in November of 2012 when the Federal Reserve promised to keep their monetary stimulus in place until unemployment reaches the mystical level of “full employment”.

That gave stock investors the green light to buy regardless of any news or scenario. We are now at all time highs for most of the indices and almost every indicator is past almost every record. There has been no pullback or correction and because “everyone” expects the overdue pullback, it has not yet happened.

Regardless of the reasons for this historic market, it has taken on the characteristics of past bull market phases. First the most economically sensitive groups rallied sharply. Then consumer stocks, then technology. Then the reach for anything with a safe yield combined with the “margin expansion” explanation. Then, finally, the short covering of the “worst” companies combined with the out-performance of the most lagging groups like shippers and Chinese scam companies.

Like in other bullish phases, it has taken the ability to set aside all caution and concern for risk in order to maximize profit. The exception is the long-term hold of those “old man stocks” with yield that has experienced historic multiple expansion. Even they are past historical multiple peaks.

But there is a road map and warning signs that must be heeded. The first to rally and most economically sensitive group, namely commodities, are very weak and have been this entire year. A year when records are being broken everywhere. Yet, according to analysts, during these historic gains the market is getting cheaper, not more expensive. Every doubter has hung up his hat after being “gored” by the bull. They have all been banished to a cave where they are cannibalizing each other just to survive as the market goes up every day without as much as a two day pause.

Certainly the latest phase in this Bull Market is fueled by endless POMO and by the April contributions to 401k’s combined with the largest “towel throw” in the past four years. And now with a one way market, low volatility and stability, we are invincible. But are we?

With 10% days in precious metals there is some new volatility afoot. Even if there is not and all negatives continue to be ignored, the technicals alone mandate a retracement that tests the breakouts that have occurred in individual stocks and the major indices.

A simple test of the latest primary breakout. After a parabolic breakout, that is the best case.

And based on my commentary you may think me “bearish”. “Agnostic” is the preferable description while I hold much of my old man stocks bought shortly after this record setting Bull Market began in 2010-2011. I have gone along for the ride without some mystical target top. I can appreciate that we are where we are, but can certainly doubt and even dislike how we got here!

Allow me to quote Bill Gates: “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

Blow-Offie Breakout

684 views

I know the site is focusing on specific trading ideas but I can’t help but look at the breadth and scope of the overall equity marketplace.

Today alone we have a big POMO day, David Tepper presenting his rip-snortingingly bullish “Tepperisms”, a terrific Tuesday being the 19th up in a row, a technical breakout for the major indices to new all time highs and massively monstrous moves in the heavily shorted names. It remains disassociated from the true economics and reality of the world yet is the picture of technical and situational perfection for markets to trade higher.

With Option Expiration coming on Friday and this being T+3 for Friday, it all feels a little blow-offie to me.

Maybe I’m just thinking in a anachronistic and linear way. Going without as much as a 5% correction since the QE-Forever rally began on November 16, 2012, we have gone above every historical norm of market action. This is precisely the reason that one can never say never nor always when it comes to market action.

Needless to say, the griddle is hot. Perhaps it can go on forever but I’m thinking that things are almost at the tipping point of being too lopsided based on the action both above and under the surface. My guess is that Op-Ex on Friday is the day to watch.

The Story Goes Something Like This…

2,921 views

Five years into the Obama Administration, many wonder how this “Community Organizer” came to the place where he has had nothing to say about the Federal Reserve’s “Royal Scam” of printing trillions of dollars for the Banks and Wall Street to enjoy. My DC sources tell me that there was a conversation between the then new Treasury Secretary, Tim Geithner and Obama the day after the Inauguration and it went something like this:

Scene: The Oval Office. Obama sitting behind the big desk feeling both confident of his achievement yet scared about the financial goings on in the world at that moment.

Obama: Hey Tim, these banks are really pricks. They destroy the world of finance, force us (the government) to bail them out, and they won’t play ball. What do I do with them? Let’s put these cocksuckers in their place!

Tim: Congratulations, Mr. President. You’ve accomplished what few men ever could. Feels great, I bet. But I’ve got to burst your bubble a little bit now, sir as we’ve got some real problems.

Obama: Burst my bubble, Tim? That won’t happen! I’m on cloud nine and we are gonna clean house. Tell me what we need to do to own these fuckers and I’ll do it!

Tim: Let me ask you a question; Do you want to be the President who presided over the Greatest Great Depression where the world completely falls apart? Do you want to be the man who presides over the obliteration of the worldwide banking system as we know it? Do you want to be the man who single handedly took the American way of life and dumped it in the gutter?

Obama: Is this a rhetorical question, Tim?

Tim: Or do you want to be the President that took over this country, that is swimming in a world of shit, and cleaned it? Made it shine like a motherfucking diamond? Would you like to be remembered as the President who presided over the greatest economic comeback, a miracle!, in the history of the financial world and to preside over one of the greatest stock market rallies in history? Hmm? What’s it gonna be, Mr. President?

Obama: Again, with the rhetorical questions Timmay! The answer is obvious! Now stop fucking around and get to the point. I’ve got a lot I can do here. Programs to help the poor. An entire infrastructure to rebuild. Peace to make with our enemies. Come on!

Tim: Do you really want to know what you should do? What you must do? You won’t like it, Mr. President. You won’t like it one bit. But if you don’t do it, you will be remembered as the worst President since Herbert Hoover.

Obama: Go on then.

Tim: Well, the first thing that you’ll have to do is to shut up.

Obama: Excuse me?!

Tim: That’s right. You must not say a word when we give banks and Wall Street an endless treasure trove of dollars. When we give them trillions of dollars.

Obama: What the fuck are you talking about? I’m not giving one red cent of Taxpayer money to those bastards.

Tim: You won’t have to. Not one red cent! That is the beauty of the situation.

Obama: Go on…

Tim: As you know, Mr. President, I was the Chairman of the New York branch of the Federal Reserve, you know, those guys who regulate the money supply.

Obama: You mean Greenspan?

Tim: He resigned just before the shit hit the fan. Perfect timing, huh? It’s now his hand-picked successor, Ben Bernanke.

Obama: Oh yeah. I remember. He’s the guy who said  the housing mess was contained and there would be no financial problems or recession!

Tim: Right. That’s the guy. But I told him to say those things to delay the financial panic. He knew exactly what was coming but was under my strict instructions to falsify in order to avert it. It eventually cost the taxpayers 700 billion dollars anyway. In fact, most of his “facts” that he speaks publicly will be untruths designed to build confidence in the financial system. Mr. President, aside from using raw dollars to meet our goals, the most important thing that must be bought is confidence. Confidence in the economy, in the banking system and most importantly, in markets.

Obama: Using “raw dollars to meet our goals”?  Where the fuck is this money going to come from, Tim? And what exactly are we going to be doing with it?

Tim: Not us, Mr. President. Them. The Federal Reserve and Chairman Bernanke. They will create the money out of thin air. That is their job! It will show up as a debt on their balance sheet. Not ours. Not the governments. not the taxpayers. Theirs.

Obama: I don’t get it. How is this money going to be used? Shovel-ready projects? Are we going to buy houses from the Foreclosed upon? Give the money away? What!

Tim: We are going to buy shit, Mr. President. They will be deemed “investments” as it will be the shitty housing paper that banks fucked themselves with. Maybe we can get them to buy some government debt as well. And the beauty of it all is that there will be no government involvement, no government oversight. Nothing. It is not required according to their mandate. A committee will make a decision and it will be implemented using freshly minted money. No Congress, no Senate, no Republicans, no Democrats. I promise you that if you keep your mouth shut, everyone will too. It will work to everyone’s advantage who has capital or access to capital.

Obama: What? No oversight? How is that possible?

Tim: Easy. Did Greenspan need approval to lower interest rates? Nope. Bernanke won’t need approval to add debt to the Fed’s balance sheet. They’ll just print the money, buy assets in the marketplace, prices will rise and everyone will be happy again. But it will take some time and a lot of money. And that money will find its way in to the stock market.

Obama: How much time, how much money? And why the stock market

Tim: At least to the end of your first term, Mr. President and certainly trillions of dollars. The stock market is the only true arbiter of confidence in this country. Companies won’t spend or hire when their stock price is down. Consumers won’t spend if their retirement accounts are down by half! It is the most public and easily manipulated barometer of the economy, even though it really doesn’t reflect the economy. Really, it  just helps those who already have the money come to the realization they could and should spend and hire.

Obama: So let me get this straight. If I just shut the fuck up about giving trillions of dollars to the fuckers that brought us to this fucked up place in our financial history, everything will be fine?

Tim: That is absolutely correct, Mr. President. The building blocks are already in place. Everyone is already on board. All I need is your approval and promise to NEVER SAY A WORD ABOUT THE MONEY, ever.

Obama: I don’t like this, not one fucking bit. I’ve got to go against everything I believe in as a human being. But I guess that’s what one must do when they become the most powerful person in the land. If it is that easy, then you have my word, Tim. And if you are right, you can retire at the end of my first term to fame and fortune. But you better be right or I will blame it all on you. And you will go down in history as the worst Treasury Secretary ever. Got it? Now get outta here! I’m planning a trip to the most stable Islamic country in the Middle East, Egypt.

Tim: Yes sir, Mr. President…Thank you, sir…You won’t be sorry.

 

All Rules Suspended Until Further Notice

558 views

The rules of most everything as we know them have been changed since the latest economic crash. The very foundations of our civilized society have been adapted to the needs of the monied status quo. Government, banking, materials, employment have all been inexorably altered to suit the current environment. And within the parameters of the new normal, pure falsehoods are perpetuated as truth. Outright lies are OK and deemed the true reality. And this goes for almost all aspects of our artificial financial complex and eavesdropping government controllers.

Why do we need to analyze anything? For markets, all that matters is the “stimulus”. There are no consequences as long as those who control the capital say so. Sure, we can speculate on individual stocks or “play” them in some way. But the fact is that an uncontrolled entity with no oversight is printing cash money and buying assets with it to the tune of billions and billions of dollars every day. In fact, the ten largest hedge funds on earth have assets under management roughly equal to just four months of this artificial stimulus. It is not normal market function it is something else entirely. And few really care as long as the game continues.

I recently got into a small twitter debate about the scheme of things nowadays and I was told to just suck it up and play within the new, identified parameters. The truth is that I find it difficult to suspend my disbelief in order to participate fully in this artificial schema, though I do own old man stocks from the past few years at considerably lower prices.

The question is continually asked about how this free money regime will finally end. I don’t know. No politician will have the guts to order it. No banker will have the stones to say enough. No regulator will have the power to end it. As long as it benefits those with capital, it cannot stop until some larger crisis develops. And I don’t know when or how it will be. Just that it will eventually be.

So in the meantime, listen to those who have been successful finding the cleanest crap out there and follow.

I am a Bad Man…

542 views

Yes, it has been a long time. Too long in fact since I’ve made my thoughts public about the current state of the market.

Needless to say, I’ve got a lot to say. But it will have to wait a little while longer.

I’m taking care of some “issues” that arise in one’s “late youth”. If I make it, I’ll have a lot more to say next week.

I promise…

A New Leaf. NOT!

647 views

They brainstormed. They cajoled. They Jawboned. They printed.

This has been going on for over four years and during this entire time the “money” stayed locked in the closed loop of the financial/investment system and sent the prices of assets ever skyward. And during all this time, the economy and everything related to it was subject to the disclaimer of “weakness”. Housing, credit creation, employment, production, consumption, spending. Anything you can think of was “weak”.

Then, suddenly, after months and months of obscene amounts of stimulus “money” pointed directly at banks and government, the major averages made new all-time highs. That’s right, as “weak” as everything was, markets made new highs. Some say it is the markets discounting better times ahead. Others say it is a recovery in corporate profits.  Others attribute the rise to the Feds stimulus. But most non-finance people have no idea why the market has done what it has done. And if you ask them about the Federal Reserve and the stimulus, they have not a clue as to how, why or how much.

I’m not bemoaning  these new highs because I think they are contrived or for any other reason. But what I have noticed is that now that markets are here, at all time highs, all the “weakness” has remarkably disappeared. It’s like someone flipped a switch or turned a page. All of those bad mortgages and underwater homeowners. All those unemployed or underemployed, vuala! it no longer matters. As the markets rallied, no negative news mattered. It made no difference that nothing was really improving, simply a stabilization at depressed levels. Now, its all good and if you are still having problems then you must truly suck.

Now the Japanese have gotten into the act. Their markets and currency are on a wild ride, greatly upsetting everyone in their region but producing (up until last week) some serious one way action.

I’m not sure what the point is in this exercise other than to vent about how we have spent ridiculous amount of wealth on nothing but keeping the government afloat and saving the balance sheets of the big banks. Plus, the creation of the thirty million dollar condominium apartment in Manhattan. Not one road has been fixed with all this money. There has been nothing, NOTHING done with all this insane amounts of capital other than to buy government bonds and MBS. BTW–the quasi-government agencies buy every new mortgage originated no matter who does the origination. There is only Fannie, etc.

And to make matters even worse, all the money used to buy MBS paid “full boat” and then the sellers (banks) hypothecated the money times 10 at least. So now we are levered to the hilt, again.

And they are not going to stop. They simply cannot.

So what about all those people left behind, the ones that don’t have a multi-million dollar pied a tier in Manhattan, a McMansion in the tri-state area and a beach house?  Well, you’re screwed because the government, media, banks, and the markets say that its time to move on up. Don’t get left behind!

Constructive Until The End…

556 views

After the failure of the Federal Reserve to truly stimulate the economy with trillions of dollars, the equity markets have done the heavy lifting. Because the stock market has rallied again past every historical norm, investor confidence has re-emerged, all in the space of one historic month.

One month of sustained gains has changed the picture everywhere. Most now truly believe that the problems and malaise that were evident as recent as last month have been nullified and that it is clear sailing regardless of the facts.

During this past month, the S&P 500 index has moved up over 125 points or over 8%. This gain comes after a rally that began in November of 2012 when the Federal Reserve promised to keep their monetary stimulus in place until unemployment reaches the mystical level of “full employment”.

That gave stock investors the green light to buy regardless of any news or scenario. We are now at all time highs for most of the indices and almost every indicator is past almost every record. There has been no pullback or correction and because “everyone” expects the overdue pullback, it has not yet happened.

Regardless of the reasons for this historic market, it has taken on the characteristics of past bull market phases. First the most economically sensitive groups rallied sharply. Then consumer stocks, then technology. Then the reach for anything with a safe yield combined with the “margin expansion” explanation. Then, finally, the short covering of the “worst” companies combined with the out-performance of the most lagging groups like shippers and Chinese scam companies.

Like in other bullish phases, it has taken the ability to set aside all caution and concern for risk in order to maximize profit. The exception is the long-term hold of those “old man stocks” with yield that has experienced historic multiple expansion. Even they are past historical multiple peaks.

But there is a road map and warning signs that must be heeded. The first to rally and most economically sensitive group, namely commodities, are very weak and have been this entire year. A year when records are being broken everywhere. Yet, according to analysts, during these historic gains the market is getting cheaper, not more expensive. Every doubter has hung up his hat after being “gored” by the bull. They have all been banished to a cave where they are cannibalizing each other just to survive as the market goes up every day without as much as a two day pause.

Certainly the latest phase in this Bull Market is fueled by endless POMO and by the April contributions to 401k’s combined with the largest “towel throw” in the past four years. And now with a one way market, low volatility and stability, we are invincible. But are we?

With 10% days in precious metals there is some new volatility afoot. Even if there is not and all negatives continue to be ignored, the technicals alone mandate a retracement that tests the breakouts that have occurred in individual stocks and the major indices.

A simple test of the latest primary breakout. After a parabolic breakout, that is the best case.

And based on my commentary you may think me “bearish”. “Agnostic” is the preferable description while I hold much of my old man stocks bought shortly after this record setting Bull Market began in 2010-2011. I have gone along for the ride without some mystical target top. I can appreciate that we are where we are, but can certainly doubt and even dislike how we got here!

Allow me to quote Bill Gates: “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

Blow-Offie Breakout

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I know the site is focusing on specific trading ideas but I can’t help but look at the breadth and scope of the overall equity marketplace.

Today alone we have a big POMO day, David Tepper presenting his rip-snortingingly bullish “Tepperisms”, a terrific Tuesday being the 19th up in a row, a technical breakout for the major indices to new all time highs and massively monstrous moves in the heavily shorted names. It remains disassociated from the true economics and reality of the world yet is the picture of technical and situational perfection for markets to trade higher.

With Option Expiration coming on Friday and this being T+3 for Friday, it all feels a little blow-offie to me.

Maybe I’m just thinking in a anachronistic and linear way. Going without as much as a 5% correction since the QE-Forever rally began on November 16, 2012, we have gone above every historical norm of market action. This is precisely the reason that one can never say never nor always when it comes to market action.

Needless to say, the griddle is hot. Perhaps it can go on forever but I’m thinking that things are almost at the tipping point of being too lopsided based on the action both above and under the surface. My guess is that Op-Ex on Friday is the day to watch.