I love shorting, although less so now that the field is so crowded with grumps and contrarians. Oh for the heady days of '99 when all anyone wanted to do was get long and longer.
Anyway, we have the most dovish Fed chair in history, a congress of enablers, a media who broadcasts what they're told, and America's greatest industry remains managing other people's money. The charts are filled with uptrends and breakouts and market breadth is at all time highs. The public continues to hate this market.
If there are truly signs of a major top in place, please share. (note to ibdman...not you). We all suspect this Fed induced ponzi will end badly, and we all hope to be properly positioned for it when it occurs, but for now, I can't see anything but more of the same, certainly for a few more weeks until the algos decide to reverse polarity for the annual 2Q dip.
doesnt take you a rocket scientist to figure out that the fed reserve is using qe 3 4 and 5 funds to buy equities. where is all this investment $ coming from that propped up these index's?
Here's just a few...
-Extreme complacency (bullish newsletter sentiment was recently at its highest level ever, AAII has come back down significantly though)
-Margin debt is only slightly below '07 levels
-SPX/INDU are both bumping against the top of their resistance trend lines from fall '08
-Outperformance by treasuries and defensive sectors (healthcare, utilities, consumer staples)--also T and VZ have moved up huge
-Foreign markets and junk bonds have started to correct
-Commodities have gotten smoked
-Earnings declining two quarters in a row
-Strong USD and overall volatility in the FX markets
-Profit margins peaked two quarters ago
-Dumb money is in the market
-Forward P/E is very high
You have a lot of other fundamental reasons too. IWM has already hit is target (it actually exceeded it). DIA is very close (
With government liquidity and economy pumping in there is no bear argument. The only argument is technical or black swan type of thing starting a sell off!
markset shouda tank friday
look at copper,10 yr,usd,euro,...baltic...
lot $ moving into staples,utilities,healthcare,defense...thats why dow beating out spx.
small starting to lag..down friday....xlf looks like gonna roll over.
vix holding some gains up for week.gold,and all commodities looking real sick...no intrest
friday just plain wierd...obamasspeech was lame but markets rallied on it.
2% tax,sequester,whats next.......bbut markets have it all priced inn...lol
you know when infew weeks they will announce that a new faze of reccesion started,you know when,right about the time qe3 was announced during election campaign.....benny knows it,but will hide as long as possible and announce it hopefully when new growth begins...not happening.
also a person i know in manufacturing has be thinking of shutting down,but now recieved some work so remained open,,,,,his new plan now is finish this work make as much as can,then shut down when summer slow downcomes...now thats confidence
I'll give you a bear argument. markets went back up to resistance and didn't do anything. Bull case S&P got up to resistance 1530 taking a break with this lil backtest to support now its going to run higher. I right now have no idea wich way this market is going right now.
I agree with most of what you said. I've been long for most of this year except recently. Considering dipping back in after recent action and Fed speak. What is difficult to judge about this market is defensive buying on dividend stocks have been so strong that while it has traditionally portend troubling signs ahead but instead the buying of Dow components (because they pay dividends) have kept the index well bid and thus set the tone for the overall market. Michael Gayed, a fund manager, was interviewed on Bloomberg and showed some interesting charts on market tops where it showed some relative performance of dividend yielding stocks vs overall markets and we are at peak levels. But again, that hasn't stopped this market from gaining speed at all. Dow average yield is 2.5%, 10 treasuries year is still around 1.8%, so maybe this stock market has more legs to go. The volatility might be quite high in March though.
"Dow average yield is 2.5%, 10 treasuries year is still around 1.8%, so maybe this stock market has more legs to go." 2.38% to be more accurate and the SPY at 2.07%. I feel the 2% mark will trigger some kind of correction and I feel that the yield will never breach that of Treasuries. So long term or that infinite top is very near. As Dunrunnin2 so obviously points out what does the Fed do to promote asset classes. That dividend is the key, so then they have to move on to another class of assets, so it is your job to figure out where that money will go that comes out of the market.
The market seems to be more slave to the calendar than any other influence, except for Fed speak, of course. Algos may be highly sophisticated computer programs but they appear to be very linear in their construct. The first qtr for each of the past 3 years has followed the same general pattern. Last years long long dipless uptrend had its first scary shakeout in early March, followed by higher highs on the next leg up to an early April top. Notably, the big caps outperformed on that move. Maybe overly simplistic, but I've been expecting the same scenario this year.