When They All Look Like Picassos


Over the many many years that I have traded, I’ve always said “when all the charts look like perfect Picasso’s”  it is time to trim and raise stops.  You don’t sell, just be more prudent.  I speak of the indexes here and some sectors and individual names.

Many seem priced to perfection and even the charts look magnificent, experience has told me that its usually the time when Mr. Market plays the great “trick” on us and hits us when we least expect it.

Sector like gold, silver, materials and miners are trading like biotech stocks now. That’s OK, they’ve been killed, but my point is not to chase them. Wait for pullbacks if you are passionate about owning them.  Many are trading ahead of fundamentals, but hey, that’s the market.

The market has come along way fast, and it seems that the animal spirits are back in play, while the VIX looks like it wants to go to zero. Careful though, that’s when the market can bite.

So what could upend this beautiful rally? Earnings and energy.

Earning are going to be abysmal, everyone knows that. Is it discounted? Well for now it looks that way, or we would be much lower. Perhaps the selloff in January already discounted a sucky first quarter and now the market is looking beyond.  If earnings are “worse” than expected though, (hard to do) then that would upend the rally.

Bank earnings start this week and are expected to report the worst quarter since the great recession. Down about 20% for the big banks like C, WFC, BAC etc…..

What about energy?

Crude is back strong even though we saw a very bearish inventory build today.   News reports from Russia in support of a freeze with the Saudis boosted prices today. But questions remain whether the participating countries can reach an agreement. Iran has balked at joining any freeze deal, saying it would keep pumping until production reaches the level it was at before sanctions were put in place, a level of around four million barrels a day. I WILL BELIEVE IT WHEN I SEE IT.

If it does happen, I think it will be a sell the news anyway.  My opinion.

I just cant trust a bare chested ex KGB murderer and a country that wont let women drive and stones them for being raped. Call me a silly.

On the plus side, we are “not” overbought.  That’s because the market has put in some nice  sideways action to work off some of the overbought conditions that were in place.

So trade them smart here. I’m long some and short some and staying light on my toes.


Previous Post
Late Sell Off
Next Post
Don’t Buy The Oil Hype

Recent Articles