Roll over Beethoven

Someone sent me an email outlining the thoughts of a notable technician. The primary thought was “it doesn’t matter”. Over and over again and to every negative indicator or objection the phrase “it doesn’t matter” was uttered.

We live and function in a marketplace whose structure has dramatically changed. It is NOT different this time but MANY of the old rules do not apply to our current environment. Yet many strategists and prognosticators continue to try and explain our market strength in old fashioned terms, through interest rates, commodity prices and corporate earnings.

Just today I read an article promising that the tremendous gains in commodity prices are builtstrictly on demand issues and the expectation of a powerful economic recovery. We are asked to beleive that this widely held perception is fact.

Let me cut to the chase. The equity and commodity markets have now discounted a powerful recovery in the actual economy. They have discounted the creation of millions of jobs, a firm recovery in real estate and an Apple chipset in every home (you know how I feel about AAPL). Don’t forget the continuation of ZIRP, QE and POMO for the foreseeable future.

Commodities will soon face position limits for speculative buyers. Sure, there will be loopholes. But we are NOW at prices that squash consumption. Some would have you believe that higher prices stimulate consumption, but that is just another lie promulgated in order to get you to believe.

Stock prices have levitated to record highs in the most volatile sectors, namely small-cap and speculative issues. It is amazing to watch the fun and festivities of a tiny stock rising hundreds of percent in a matter of days or hours. But anyone who has seen this in the past knows how it ends. And only a smattering will exit in time and stay out or short. No, the vast majority will be scorched.

This December/January rally fits with my prediction that 2011 will look very similar to 2010 for market performance. But now others have seized on this conclusion, so it may need review. But the length and breadth of this rally now has me not just raising the stops on our remaining positions, but actually selling as well. Some will say that I’m a bull in a bear’s clothing or vice versa. I am no such thing. I am a market realist. A may miss some opportunity, but there is another one just around the corner.

A very smart commenter on this blog said to the effect that “they’d never let the market drop before AAPL’s earnings”. That makes more sense than almost anything I’ve read about our marketplace. The “just buy the dip” complacency is as high as I have ever witnessed. Stock performance is as positive as I have ever seen. As Le Fly says, “it is the easiest tape in history”. I’ve been cautious not to chase things and impatiently holding my longs. My call is that today is just another beartrap. We will then spike one more time, to new post-crash highs. Then get ready for an extended period of consolidation and some real opportunity to short selected issues.  My antenna are up, bigtime.