Saturday, June 13, 2009

Rampaging Bearishness

Rampaging Bearishness

This run up has been amazing in its lack of pause for breath, say its an ABC correcting the main trend which is down, we are at the end of A or darn darn close, and then B down will ensue, it might last a few weeks (if panic sets in) or a few months, then a summer push to new highs, around 1050 S&P because that's about a 61 FIB from the Aug 08 highs.

Earnings may be OK for some financials / trading firms and those who have been allowed to not mark to market and thus propagate more lies to fertilize these green shoots. But for the most part, earnings are going to be terrible. Japan Industrial production was down 40%, Europe just announced 21% down. These are huge, huge numbers. We are 2 weeks away from the end of the quarter and NOBODY is talking about earnings--like that monster in the closet isn't there as long as you don't look.

XLF (financials) are coiling up like a cobra....about to make a big move.

At the same time, the bullish percent index is getting right up there to exuberant levels.

On the S&P bullish percent is close to the 2007 "mother of all manias"$BPSPX&p=D&b=1&g=0&id=p11391426412&a=164488777

Yet Housing (people under water, being financially and emotionally crushed by being trapped in a long term no win situation) is not even close to being fixed.

Well if our economy is 70% consumer, and the consumer is in a savings, retrenchment, or perhaps "being crushed by housing, more taxes, more restrictions", then is is going to take your real cheerleading to convince consumers to be optimistic and put yet another Harley and Large Screen TV in their garage.

Then to complete my bearish case, lets ponder the ramifications of Tarp money, where it is going to, how it is being tracked, and perhaps coincidentally, the attempted illegal transport of $150B in US dollar based bonds from Italy to Switzerland by Japanese nationals, at the same time as Japan gov proclaims how they trust the US dollar and are gong to continue to be strong buyers of US debt. This may just be some elaborate conterfieting scheme, but the ramifications are potentially enormous, and the US news media has COMPLETELY ignore this story--that tells you it's important. Well let's not even get started on how the US gov is counterfeiting its own money...effectively stealing from those who have saved and have worked hard, and have been prudent.

Also there are quite a few ways in which global political events could worsen, Korea, Iran, Israel, along with our ongoing wars that are not going well, and costing trillions of dollars.

Then from a socio-economics perspective-- although we have been told about some green shoots popping our from the rubble of multiple imploded ponzi-schemes, why are random acts of mass murder suddenly in vogue, and why are vampires so popular. The mass human psyche is on a "Dark Wave (TM)" and we all know that we've been living too high off the hog for too long, and we a unified subconscious level, that the piper is going to show up and he will demand payment.

But as our favorite burn victim banker used to say...."when the music is still playing, you have to get up and dance", but it is indeed a sketchy and spastic dance going on today, since we know the piper stands right outside the door.

Now a real contrarian would take this incredible bearish rant, and go highly leveraged long :).

Personally I am going to roll into a delta neutral stance with some lottery longs that will trigger on advancement, with trailing stops fairly tightly set to take advantage of a possible blow off top which will also clear out so many short stops, so that not many people can enjoy a quick move down. Say on a 3% move will probably get a lot people buying the dip long, bring more money into the market, then a recovery day, then 3 days straight down...taking 10% off the market...the bears will be waiting for an pullback in order to short, and they will never get it. I think much of this can play out this weekend next, as we traverse some Fibonacci reversal timeframes, and as we approach the summer solstice which is coincident with a new moon. Molecool also has some secret turn date around the 24th or 26th.

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