Nothing Left But the Spike

This is turning into one of the greatest Bull markets in history. After all, there are no sellers anymore. There is no “sell the news” as everything bearish has been discounted and anything bullish has not. Be long or be wrong at any cost.

Today, worldwide markets (except China) are up 1.5 to 3% across the board. It doesn’t matter what the sector is, most everything is up because the Europeans are buying all the short-term government bonds outstanding in the name of “price stability”.

So we ask the question, “where does it go to”. The answer is “to the moon”. It is far worse to be cautious and sidelined during this monster bull market than to be bullish during a crash. If you even breathe a hint of risk management, you will be a laughing stock and the “training” to never sell continues as long as Central Bankers have printing power.

You know how you feel sick to your stomach being heavily long during a major market correction? Now folks feel directly the opposite; they are sick that they are not 200% long and margined to the hilt.

This is not sarcasm in any way. The market is at post crash highs and there are no sellers in sight. Historically, this market action and news reaction would mean we must be peaking. But not in this world governed by the Costanza philosophy.

So, imagine this: The Europeans are contemplating buying all the short-term paper from all the European countries, or something similar.

The WSJ has “speculated” that assorted Fed-Heads are contemplating an open-ended QE that continues in perpetuity or until the economy posts solid growth again.

Asian markets began to respond to the obvious worldwide economic slowdown with lower prices until the “hope” of more stimulus came to the rescue and sent markets higher.

Most companies have warned of a slowdown through next year yet the new trillion dollar triumvirate is in charge (AAPL, GOOG, AMZN) and holding up the market.

Everyone is bearish because of economics but in reality everyone is bullish because the American market is at three year highs. Everyone is participating in the market because they “just follow price” and will be able to liquidate at the drop of a hat.

Central banks want to pump inflation at all costs. Soon the supply of materials will be overwhelming yet prices of everything needed will be at record highs.  I just cannot imagine the deflationary forces at work that must be counteracted!

It is the beginning of the Democratic convention, and unlike the “full of shit” Republicans, we will enjoy some “delusional” presentations to remind us that “Obama is the Magic President that has made the stock market double”over these last few years.

Are market prices real? Are they sustainable or are they just a mechanism for Policy that allows the government to fund its deficit spending? Is there a real danger of prices falling out of bed or is the market “fully controlled”?

My belief, taking fundamentals, technicals & sentiment into account lead me to conclude that there is very high risk in markets. How or when I cannot say. But a quick thousand points just before or just after the election is not out of the question.

Clearly Ben Bernanke is the greatest FED Chairman in history. His policies are responsible for a 100% rise in market indices and two million jobs created. And he no longer has to “print” to get the market to go higher. Just the mere sight of him is a Pavlovian Promise to more “stimulus”.

The ECB has clearly taken a page from our illustrious Chairman and are doing the same thing; All Talk, No Money. And its working beautifully.

The election season is well underway and even a Republican bump can’t stop the markets from rising.

No, there is nowhere to go except American Equities.

Thank you. God Bless you and God Bless these United States.

The Facebook lockup was the last best hope of shorts scoring before the end of summer. This price area is where the lockup ended and it seems to be holding. If valuation wasn’t such a scam, it would be screaming higher.

Today is YELP. This stock, and today’s action, may be the greatest shortfucker of the year.

We are now about to witness the J-hole in all its glory. Do you realize that every speculative short has been covered? I generalize, yes, but my thesis is sound.

Few want to be short anything in front of the J-hole.

This trading scenario falls in beautifully with the Max-Pain outlook from yesterday and the technical picture that shows most “everything” up on diminishing volume and at major resistance.

If we weren’t so scared of the next trillion digi-dollar stimulus, it would be a picture perfect technical setup for significant downside action.

Boy, it sure sounds like more stimulus is coming regardless of the calendar or the level of the markets. And the markets have certainly discounted that eventuality.

It’s all good! The Magic President will get re-elected because the stock market has doubled, amongst his other “great achievements”. Remember, if you are successful, you (he) didn’t do it by yourself (himself)! But now think about this; the market is the last and only Policy Tool available to the “great thinkers” in our government who decide what is what.

“LET THERE BE PRINTING AND LET IT BE PLENTYFUL” says everyone not Republican. So there shall be printing. And it was good because the market rose.

The market has been all about going one way; up. And anyone in the way gets steamrolled. It has been a summer to behold, agreed? Now imagine that there is more stimulus. After all, everyone knows it is coming, right? And if it doesn’t come now, it will come later, right again? And then a sell the news reaction. You’d buy that dip, right? What if max pain was for the markets to drop and stay down? In a market with hardly a lick of liquidity? Is it possible?

Nah. My imagination is getting the best of me. Next stop, “The Hole”.

The major indices here in the United States are up more than almost any other market in the world since the crash of 2009, up over 100%. And the stock markets is acting very much like it has over the past three years, except “more”.

Each year the economy (yes Virginia, there is an economy),  does the exact same thing; strong holiday season with no follow-through into the next year, until the following holiday season. Through it all, the Federal Reserve adds stimulus to the mix at almost the exact same time of the year and market participants are so well trained as to not deviate one iota from the past script.

This week is the famous Jackson Hole meeting where Dr. Bernanke thrills and chills with his plans for future stimulus and our market has run to a post crash high in anticipation of that and a Euro bailout. And it is a Presidential election which mean that the Political class is occupied. It also means that the government statistics are good, in fact better than expected. What a surprise!

But what is most important to the investor class and the computers that dominate them is the past performance of each and every stimulative effort. We have seen the hard numbers here, published by Dr. Fly, as well as a plethora of other publications that show the monstrous upside during free money stimulus and the nothingness of the times in between. So regardless of what the economy is really doing in the traditionally weak summer months or the buildup to the holiday season, “everyone just knows” that there must be some new and fantastic stimulative effort, foreign, domestic or both. And the computers that “provide liquidity” have run in one direction in anticipation and “the guarantee” that the market will run up for another six months.

What does it matter is prices are not based in economic reality or sustainable in any economic cycle. Oh, I forgot, there is no longer an economic cycle, just a stimulative cycle. These things don’t matter though the Wall Street Complex will show you how one economic statistic or another is what really dictates the market action. And Apple owns every market it is in, and is still “dirt cheap” with an almost $700 billion market value.

Policy makers know that markets are their last and only policy option. Nothing else has the slightest chance of making a dent in this multi-year deleveraging and deflationary cycle. Their inflationary push will push up prices but eventually and ultimately do far more harm than good.

Markets have been building to this time and this time is here. It is all magic, like “Obama, our President who made the stock market double”…