If I Had a Nickel

No one can call a bottom. Those that tell you they did got lucky, it makes them knife catchers and bottom guessers. If you play that game you will in fact get it right on occasion. If I had a nickel for every time I thought the bottom was in and it wasn’t I’d have a lot of nickels. This is still the greatest market I have ever seen in my life and opportunities are plentiful. Personally, I prefer waiting for day two after a melt up, than throwing money at scared shorts, but that’s just me. Validation of the initial move is so important. This market has amnesia and myopia, we all know this and I’ve seen this movie way too much. Bear market rallies and sell offs are vicious.

This market has been through so much the last few years. Lehman, Bear Stearns, Countrywide, Merrill, CDO’s, CDS’s,  a housing crash, off the hook unemployment, Europe falling into the Mediterranean, the Arab Spring, $ 140 oil and the first downgrade of the United States of America. It’s the circle of life, it’s the endless news cycle of the market.

We have been living through the European crisis now for over a year, waiting breathlessly for the next country downgrade. Most have happened, some have not. We wait everyday for Greece to default. We kick cans and we break out band aids. We use words like bazooka and Troika. We have all become macro experts.

We still don’t know if Greece and Europe have figured it out. I will still lay huge wood that they fail. I trust the leaders in Europe and their ability to do easy math as much as I trust Casey Anthony with my kids.

We have rallied bottom to top about 85 handles on the S&P ($SPY) since we put in lows on Thursday. Was that the bottom or was it just a sweet little squeeze combined with rebalancing and month (and quarter end) window dressing? Who cares really? It’s all about the tape. Do we break 1120 and tag 1040 or do we rip this thing because the 2 year is paying us 25 bips?

The conversation is still all about Europe. Soon that will pass and we will get back to the massive challenges here at home. Maybe the banter will drift back to the Mideast again and we’ll chat about Iran’s incessant sabre rattling or maybe (we haven’t talked about this one in a while), we’ll debate how China is becoming a mess and could be the next slow motion train wreck.

It’s just the circle of life. Be careful out there.




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