4 Here we are making multi-year highs, but something doesn’t seem right, or is that just me? When I was talking to Chess on Twitter last night both of us were extremely bullish. I spent most of my morning dealing with BS (I’ll get to that in a minute), but my book was total BS too. It’s weird really, that 80% of SPX companies are above their 50 DMA’s and VXX is 4.27% from its 52wk low, yet, there is the debt ceiling, Europe, etc. As I look at my watchlist today, many of the names are down, names that I would expect to be going up. Tech seems to be out of whack with AAPL is beaten down and RIMM ripping into BB10. There are a lot of names with very strong fundamentals but sketchy technicals.
When I look through The PPT, and read “Le Fly’s” posts on here, I can only say with resounding certainty that he is right about home builders and China. Building materials, machinery, etc, are the safe names to be in, houses will be built, iPads may or may not be sold. Now, the market has been able to stay up here without crazy volume because of healthy earnings in financials and stable small caps, but should that foundation crumble I am scared as to what might happen. We’ve broken through the highs of September and October, and I truly think people want this market to go higher, but if we see an increase in options volatility, I think everyone runs for the hills. Especially with precious metals on a downward trend, even though the BOJ and the Fed continue to print.
I want to be bullish, but I am frankly cautious and expecting a correction to the downside. There’s just not enough fuel for the fire, and one bad piece of news will cause a serious sell-off. This is just my opinion, but I think it’s the right one. This business is all about managing risk, thus, that is what I am alluding too. I must also mention this “ho-hum” earnings season isn’t exactly exciting investors. Note that Monday is also a holiday, which can throw a wrench into the proverbial spokes.
I absolutely hate to be even close to thinking in a bearish manner, but let’s look at the charts.
S&P 500
VXX
Be careful out there and have a good weekend. I’ll tell you about the madness of this morning in a later post.
4 Responses to “Recap of the Week 1/18/2013”
Randomness
I will agree that something doesnt look right. But it hasnt looked right for 5 years.
Chess has noted the strength in Russell small caps. That is to say companies mostly with only US exposure ((or non EU or anywhere else exposure). That seems to be saying….for now… the US is going to be OK for a bit. Multinationals….we will see….
Yet watching positive correlations go negative and vice versa I am really holding my nose most of the time.
Rhino
It’s like this false world exists.
drbigboss
I agree that something doesn’t feel right but the other point I’d add is that it seems like everyone I talk to in the entire investing universe is cautious, high cash levels, etc so I think the pain trade is actually higher. that being said having vol at mid 2007 levels is scary in itself.
Rhino
Dude, look at that SPX chart!? I just sent you a text.