If I expect the DOW to go to 12k and the SPX to get to 1300 by next Friday’s option expiration (earliest) or by the first week in February (latest), does that mean I’m now ready to throw caution to the wind?
No.
Even though it seems as if the market is “to the moon, Alice”, only a few things have hit the lunar surface. When my little KLIC is up 30% already this year, I get both excited and a little nervous.
Interestingly, including today, the DOW is up just 300 points or 2.5% from the peak set during the first week in November. The SPX is up more, about 50 points or 4%. The Nasdaq has been where all the gains are, up almost 250 points or almost 10%. Of those gains, $100b worth is AAPL.
Aside from the more speculative and beta-producing Nasdaq, the gains have only been “marginal”. That means “not as much as you think”.
But today is a breakout in the world of technicians. If there is no selling, then you must buy. Asia is rescuing Europe today. What is their motive? It doesn’t matter as long as stocks are going up. The bullish sentiment is so stretched that it has come full circle, especially with GS expecting the SPX to hit 1500 next year. That either means they are liquidating everything now–or we will reach their target is a month or two.
Dr. Fly has it right. Put away your brains, knowledge and logic and just believe. Until everyone tries to get out the door at the same time that is…Then you’ll be stuck along with the newly converted.
The best strategy for investors is to try and hold through this risky and overextended market. Pick your spots to take profits and don’t look back. Traders should just hit and run but be ready to go “the other way”. Realize that nobody is “going the other way” any more so it is only a matter of a short time until it will pay to do so, bigtime.
ADDENDUM: My run for the gold is “tounge in cheek”. We could easily get to 12k. But it is all the more reason to run from the lies. Yesterday and today are seminal days that will be viewed as the cusp of an important turning point…
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Same song and dance seems like you got your tail between your legs and are running towards the other direction..join the bull side…I am your father
hey dc, is your middle name jo?
Scott,
Great post as usual. An astute assessment of the macro environment, after all paper gains are just that. Money in the bank is better than on the table.
I am also short term bearish on gold, especially with the rising dollar – although that doesn’t seem to matter for now. What’s your view on the timeframe for a pullback in gold?
Not to get all Scott Bleier on you Scott, but I suspect the correction will be about a month after POMO ends – headfake higher, people believing the market can shoot even higher, with the first few chinks in the armor finally showing up to reveal itself 😉
pomo will not end for along time
personally,i’m waiting for when the dow does 14.5 again, right before the carnage struck, thats where it should begin to get antsy