That guy in the tan pants represents bears today….
Obviously, as is always the case, Wall Street loves when the government does everything in their power to steal from the middle class to give to the power players. Reverse Robin Hood – what’s not to love? I’ll have some posts in the coming days to explain what is really going on once I get a chance to read through some sources who will explain it much more elegantly than I would in my stupor.
As for the day the S&P, once S&P 804 broke, we exploded higher. As expected, HAL9000 (quant funds/program trades) and friends jumped in once we cleared that level and *BOOM* – it was all bear entrails from there. Long only, 100% invested fund managers are feeling smug: “nailed it!”
I had a nice short of Ultrashort Real Estate (SRS) I put on in the last 15 minutes Friday which some readers questioned – it would have behooved me to have kept it all day… see below. And once again this shows you, these 2x, 3x instruments are completely inappropriate long term hedges – if you hold them longer than 2-3 days, you are playing with fire. I learned the hard way in 2007 and 2008. Many commercial REITs are still 70-90%+ below highs reached even in early 2008, yet SRS is approaching all time lows. Laughable instruments for anyone outside of daytraders ….
It is getting quite frothy indeed so we’ll see what the rest of the week brings – the S&P is now up 23.5% in 11 sessions… Boo Yah. At this point, just as I had continued to lean bullish as long as we held S&P 741, I am of the same mindset and just am moving my “prices” up…. now 804 is the old 741. I let go long exposure into the froth the last 5 minutes, and am willing to sit on the sidelines for some rest… but would like to buy dips down to S&P 804 now. My intermediate target will be S&P 870; if you are buying tomorrow morning on any sort of gap up, or +2% open, I’ll be taking the other side of your Kool Aid.
The market is wickedly expensive on earnings, which again start rolling off the assembly line in size in about 2 weeks. Right now none of that matters because for every dollar in your pocket, the government is intending to create a new one. Our economy is $13-$14 Trillion and the stock market is about $8 Trillion. So for every $1 Trillion we create you can see that’s nearly 5% “monetary inflation” (if you will) – and we now create $1 Trillion every other week. Gooooo Bubble Team.
Until the cold splash of earnings arrives, it’s all about technicals, as fundamental investors have had their clocks cleaned for 1.5 years. Machines rule.