So can we take today's massive pop seriously? The bull and bear argument gets more interesting here, much more interesting than a day or two ago. A few days ago we waited for the fall into hell, Europe was finished (probably still is) and the economic numbers on the home front sucked.
The bears are waiting to short this rip (maybe a gift for them) and the bulls are caught off guard. Both sides want to know if this is real. I want to know if this is real. One day does not a trend change make. We know this.
All I know is that when sentiment is in the dirt you need to get long. When too many people are on the starboard side of the Titanic and can touch the water, you need to hit the port side. I love trading extremes. This happened for me with the Euro, the 10-20 year treasury $TLT (I'm short) and the market. Everyone hated everything.
I speak from great experience because in the past I have "shorted the hole". That basically means you have bought into the negativity to such a great degree, that you pressed and shorted the lows. Armageddon was at the doorstep right?
Now, for a minute, I want you to think of all the folks that told you this.
Taking a shot when the world is against you takes balls, but it pays. Sometimes a day or a week can make your year. Money follows money up and down. The macro case for stocks has been in the dirt, the put/call ratio was silly and sentiment was dead. I couldn't find a family member over the weekend that didn't want to slice their wrists. They were selling everything on Monday.
I am the greatest skeptic in life. I think Mother Theresa had a secret agenda. I hate all politicians and think the market is rigged. I trust car salesmen more than Jamie Dimon and think most lawyers should suck on the pipe of my Wrangler. I still think Jimmy Hoffa and Sam Giancana are alive and are plotting the assassination of Romney if he gets elected. They have a safe house in the bowels of Camp David, even the secret service is clueless to this.
Anyway, after a record day, here are my thought going forward.
Case for Bulls
Mario Draghi was supposed to save the world this morning. He passed and did nothing. He agreed to agree to have a meeting to discuss more meetings. The tape expected more, went down, tested levels and ripped. Bad outcome, market still ripped.
Beige Book- Things were OK, but NOT slow enough though to signal for QE 17 or a surprise opening of the discount window. The market thought about it for about an hour , but ripped to close on the highs. Bullish action.
Secret Calls- Going back to my paranoid skeptical DNA, the powers that be, as completely dysfunctional as they are (Bernanke, Geithner and the leaders in Europe) are on the phone while we are sleeping. Count on it. We are at a tipping point of biblical proportions. If this was ten years ago I would say it all blows up. The new normal though suggests that we don't let anything fail, especially if it effects us. Europe effects us.
Technicals- I love how the macro bears hate technical analysis, but they just can't stop talking about the break of the 200 day moving average. When it works for them it's a "powerful" indicator, when it doesn't, it's just an archaic form of witchcraft.
Media- "Put a fork in it, we're done." The more they "neg out", the more bullish I get. They read lines on a teleprompter and know zilch. I've seen this movie before.
Politics- Trust me, I hate them all, this is a non-partisan observation although I am a fiscal conservative. A Republican win may have been part of this market today after the Walker win last night. The market wants to be deregulated again and the Reps will do this. It only makes sense, a new bubble needs to be created. I've always said that, mostly tongue and cheek in the past, but frankly it's true. The market begs for bubbles and loves new risk. Give me a massive bull market that didn't have some type of bubble and I will eat crow.
Case For the Bears
Technicals- This could cut either way for the bulls or bears. We are so oversold and we did catch a rally today, but the technicals that I watch like a peregrine falcon haven't turned up. They are turning up, but haven't hit the levels that would make me go all in. They are very close to validating and if they hit, then I will be convinced this is real. These indicators could change tomorrow or it may take a few days. This could also be what everyone thinks, and we are just a one hit wonder.. Subscribers know what I'm talking about.
Europe- Back to the secret calls. What if they won't take help? What if the ideology is so strong that they say eff off? The IMF, (yes, your taxes fund the IMF and you will bail out Europe whether you know it or not) is probably ready with a bazooka, but it could be like feeding a kid spinach. I don't think this happens though.
Greek Elections- On June 17th the New Democracy and the red wine party (Syriza) vote again. The polls are all over the place. If the red wine party wins it's bad. This could be discounted though, not sure. The downside is 1200 $SPX if it's not.
The U.S.A.- We suck right now, no jobs no nothing. Growth is dead, this could be good for the bulls though as the heroin needle and the printers come out of the alley.
Bottom line, stay nimble and trust nothing, follow the momentum, it's the only thing you can trust.
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