What a move in housing this year. $XHB has doubled . Three sectors I never trade are autos, airlines and housing. Truth be told I didn’t buy into the move and that was my bad. I should have paid more attention.
I mentioned on Stocktwits last night that “housing is improving not because rates are low, but because rates are going higher.” It’s human nature to want what you cant have or to grab furiously at what might be getting taken away. People are seeing rates inch up and while many were waiting to pick the bottom on rates, now see that opportunity slipping away. They read about the bond bubble popping and rates going even higher. At the end of the day the free market will set rates, not Bernanke.
Yes I know banks aren’t lending to holograms and cadavers like they were six or seven years ago, and that may never happen again, but you know they will find a way to play in the sandbox of the next great bubble that has already started.
So maybe the doorman at the Ritz Carlton won’t own three properties at once anymore, but banks are great enablers if they want to be, and they will find a way.
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The clear and present dangers of Europe and the fiscal cliff are gone for now, hibernating, but not an imminent threat. Based on this, the tape goes higher everyday. I was sitting around thinking of past markets that were similar to this. There was a lot of complacency, much optimism, everyone was bullish and there was nary a care in the world. It’s usually at times like this that the market will come and temporarily break your heart. It always seems to take away the punch bowl when the majority is leaning one way. I am very bullish, but my last few posts have been of “bullish paranoia” about stocks. It’s good to be paranoid in the stock market.
If you remember back in early May, it was all systems go and the market looked like it was ready to take out the April highs. It came about seven handles shy. We had a soft jobs number and the DOW traded down 168 points and ended the week lower. That preceded about a 120 point move lower in the S&P. We then bottomed on June 4.
October 19 was another doozy. Again, the market was minding its own business and working higher. At this point in time, it was trying to take out September highs. $GOOG reported a disaster and the markets dropped two percent that day. Earnings were coming in very soft. This precipitated about a 110 point decline in the $SPX. We then put in the November 17 bottom and it’s been onward and upward from there.
Is it different this time? Usually not. The market is the market and it does what it does. If there is one place that history seems to repeat again and again, it’s the stock market. It’s always good to be prepared for that cheap shot left hook that you don’t expect, or that mini black swan that may be disguised as a duck. They happen.
Will it be this week? There is enough economic data coming out (maybe one data point goes bad) to screw the pooch if it wants to. It might not even be that bad, but the market will look for that reason to let some air out. The market wants to go higher and it will go higher, but it will find a reason, as it always does, to pull back.
We may want to tag the $SPX 1520-1525 area first.
The nice price action started Tuesday for the market as prices lifted. Everyone is waiting for the pullback now, because they always do arrive. The question is always the severity of such a pullback. Nothing goes in a straight line, ever, so looking over your shoulder right now probably isn’t the worst thing to do. Maybe the $SPX pulls back to its 10 day moving average, that takes us back down to around the 1440 level. Not the end of the world by any stretch, and I guarantee you there will be buyers lined up around the block to buy the pullback. Pullbacks should be shallow and very buyable.
The market has shown us two things over the past few weeks, it doesn’t care about Washington, and it doesn’t care about what $AAPL does. There is such underlying strength in this tape that AAPL has become a side show. Both have been put on mute, which is a good thing. The chart of $AAPL started telling us a story back in late September, those that paid attention avoided a body bag or actually made money shorting the name.
We wasted our time watching Bill Ackman and Carl Icahn throw a bitchy hissy fit on CNBC Friday. Some marveled at what great TV it was, frankly it was a disgrace and exemplified why people hate and distrust Wall Street. Ackman strikes me as sneaky, and Icahn just a mean old man. I’d rather watch Honey Boo Boo. Enough of those two. I’m not long or short $HLF ,but I’m sure pre-teen Herbalife distributors in Borneo are legit though. Who am I to judge?
I think the financials, $XLF still have miles to go before they rest, so I plan to get deeply long on any pullbacks. Energy, $XLE, $OIH is finally getting strong bids in all different segments of the space, and from my perch, technology will soon go higher on a sustained basis. Hard to believe $GOOG is sexy again and $AAPL isn’t, but technology will go much higher anyway.
I will post some set ups later.
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We hit $SPX 1500 today without much fanfare. No big rip, no big volume thrust, so nothing really to shake any shorts that are left in this market. No massive buy stops were furiously set off as we hit the big optical number that is 1500. $AAPL was massacred and $GOOG added to gains. The transports ($IYT) made more highs (extended), and that put Dow Theory groupies in bull market heaven. $IBM was flat as it digested yesterday’s big move. $NFLX was UP 42%. Body bags were needed for NFLX shorts and AAPL longs. This is so far from a widows and orphans tape. If you lean the wrong way, you will need a tourniquet and a paramedic. If you have the balls to play earnings on these names, you’re a better man than me. Better odds at roulette.
I was looking at some of the S&P targets by the “pros” today, and I saw nary a target above 1600. So am I supposed to get excited for a mere one hundred handle move over the next forty nine weeks? I think 1650-1675 will be more like it. The global “serial easers and printers” have left the markets no choice but to explode to silly willy levels. You may not realize it, but the next bubble has begun, right under all of our noses. Bubbles start in a stealth fashion until people realize they have made tons of easy money, too much money. Those that were left behind (retail), then wants that easy money, and the bubble pops. We could have two years of this. Bull markets always go up in spite of everyone’s doubts.
I write this at 1500 and we may be ready for a correction, so spare the emails if we go temporarily nosedive. Dips need to be bought. Fighting this tape will be like fighting the judge over a parking ticket. You will always lose.
Economics don’t matter. Don’t believe me? See the ETF’s of these countries where the economies are on life support:
Never fight the Global Fed. Bubbles are awesome.
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