It’s All Techinical Now…

We are now into our first milestone date of the year, President’s Day.

Markets across the spectrum have rallied 20-30% across the board. There has been no pullback, just a one way, low volume, buy the dip action, similar to this time in 2011 & 2010.

The domestic economic backdrop is the same as the past few years as the Holiday Season brought about an uptick in economic activity. Not a big one, mind you, but rather just enough for economists, government and the media to take notice. Some say it is subtle propaganda. I say there is nothing subtle about it for it is designed to get you to believe. And your belief will certainly force you to allocate assets into your 401k/IRA at yearly highs.

The computer Algo’s that dominate the market have trained the remaining market participants that they must buy stocks regardless of the news or risks and they have, especially Apple. But I believe that much of the recent and frenzied buying in key stocks represent the unwinding of derivative-related bets left over from last year. A trending market causes a re-think of many strategies, especially since last year was all about the trading range. Plus, the absolute “thinness” of the equity markets cause moves to seem histrionic. And now that there are “good-looking chart setups”, be careful. That is usually when the ax falls.

And just like the past few years, the Central Banks own the markets, but this year more so. Now everyone is printing and that is all the markets care about. And it will occur until either the world economy self-starts, or it all just explodes.

So enjoy the elevated prices of financial stuff and have a safe and happy long weekend!