It’s been a three-ring circus for stocks since they broke out decisively above SPX 1150. I can tell you that there were A LOT of shorts built up during the grind-up in February and early March.
Guess what? They covered. It was the greatest stop-loss since July of last year.
Next comes the end of the quarter and there is unusual pressures in many markets. Commodities–other than the trading widgets of oil and copper–have been getting slammed. If the economy is recovering, why is this happening. The logic is more than perverse and it only says one thing; deflation and a double dip later this year. But we’ll worry about that later, right?
But stocks, and until today, bonds, have been telling market participants that the sky’s the limit. Short covering, end-of-quarter asset allocation and ribald speculation have been giving us fun. But when they look this good, it is usually too late. Chasing will get you bagged because even just a market pause will send the speculative stocks down 10-20% immediately.
If you’re a trader type, then listen to your gut. It says we are ok into next month but the finger is on the trigger. If you’re an investor who doesn’t stare at your screen all day, then it is time to lighten up as we enter earnings season. Sure, comps are easy versus last year. But have not expectations come too far in relation to stock prices? The technicals say not yet. But this is an event that you should be ready for.
Now that the odd-lotter is “getting in”, the market is going to bag them. Mortgage-backed securities buying is supposed to end next week. Without the odd-lotter, and now that the near-term shorts have covered, where is the fuel for the next advance?
In the meantime, get used to the word “resilient’…
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Scott… just a shout-out that I’ve enjoyed reading your blogs.
Fly, great addition to your site.
Congrats to both.
100-200 ticks one way or another are throwing equities, closed ends, and fixed income all over the place. This is something that’s relatively new today, and people should listen up if they have ears…good post Scott…
Your market play-by-play and your morning pre-game show are simply outstanding. Keep it up Scooter, but throw a “holy cow” in there once in a while for the Chicago demographic.
Or at least a “Hey Hey It’s a Home Run” (Jack Brickhouse- WGN- Cubs and Sox 50’s and 60’s).
Or maybe a Bozo or Garfield Goose or Romper Room (holding magic wand: I see Fly, Caffeinated,Jake,etc.) imitation for old times sake.
http://www.youtube.com/watch?v=nDQHQkuv9l0
HOLY COW
Great stuff, so far the leaders are saying stay in the market
Even GOOG is up today
Watching and waiting for them to get hit before bailing
Scott, I heard last week that only 20% of the allocated stimulus has hit the street. That’s a lot of fuel left for the market—maybe. They are just going to keep throwing money at the economy to keep it going and then will monetize it thus avoiding deflation and causing high inflation. The Euro’s descent is letting Bernanke keep an open bar for even longer. Did you see the WSJ article last week where someone said it’s a lot easier to pay down our debt from inflation than to tax our way out of it and that raising the inflation target to 5% could lower unemployment by 3%? All hands on deck in Washington to generate inflation.
enjoying your commentary. The ibankcoin site has had an even better leg up this year than the market imho.