Ride the Bubble, It’s a Good Thing

“In all our quest of greatness, like wanton boys, whose pastime is their care, we follow after bubbles, blown in the air.” – John Webster

This correction has been a bit overdue and maybe we go a little lower, but the volume yesterday was not scary at all.  It was orderly and we closed off the lows.  As I mentioned Sunday night, 1370 is the next logical level of support, below that maybe 1330-1350, depending on many things. One event could be Europe again, Spain hangs by a thread now, (unless you think a 24% unemployment is normal) and Italy isn’t much better.

The North Koreans are ready to shoot off a roman candle and the Mideast is bedlam on a 24/7 basis. With all of these moving parts, the market still looks fine from my perch.

The banks had a big move and needed to pull back, so did the housing stocks ($XHB). Energy looks the worst ($XLE), and yesterday that ETF closed below its 50 day moving average. The Dow Jones ($DJIA) also closed below its 50 day, which isn’t good, but it’s not the end of the world. The materials are failing miserably, ($XLB) and needs to find a bottom, maybe it needs to tag the 200 day at the $ 35 level.

QE chatter spread around some trading desks yesterday because we had a weak number on Friday. Frankly, I think it’s silly and completely unnecessary for QE3, but perception is reality, and if enough people think it, the market could move higher from Bernanke speculation. We live in a world where the market is the addict and Bernanke is the dealer. Greenspan was the same way, that era ended in misery and this one will too, but not now.

I jokingly opined on Twitter after the crash that what the country really needed was another bubble to get us out of the wreckage.  It was tongue in cheek, but guess what? We are in the midst of the Bernanke bubble, Greenspan created the first one, we crashed, licked our wounds and entered this bubble. We are smack in the middle of it. That’s OK, the market will go higher as a result. Good old fashioned bubbles take years to break. The downside is that most retirees will be working in a Waffle House near you to compensate for the zero return on they are getting on their retirement nest eggs.

Greenspan & Co. wanted everyone “in” a house, they thought it was everyone’s birth  right. Bernanke now wants everyone to “stay” in that house. Different names and players, but the same story.

P.S. And by the way, I wish people would leave $AAPL alone. I have no deep seeded long standing love affair with the stock, I only trade it, but it seems the haters in the name are the ones that missed the move. I hear nothing about $CMG or $PCLN and the charts look the same. Go eat a burrito.




We kick earnings off with $AA tonight and its that time of year when I cut my position size in half. Too much tomfoolery and skullduggery with earnings and I don’t play earnings roulette. We will also see $GOOG, $WFC and $JPM this week. Keep in mind that expectations are lower this quarter, so it will be interesting see how the tape reacts to the reports.

Have a great day.

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