And he winner of the 2009 buzzword for recovery is…..green-shoots. This has quickly surpassed “mustard seeds” and phrases like “we are in a bottoming process” and “everything will be cool in six to twelve months.” CNBC is scurrying frantically as they make sure they are saying the word at least six hundred times a day as failure to meet this quota could result in a major correction. The producers at CNBC are also desperately searching through their rollodexs to summon the same incompetent perma -bulls that have been wrong for the last 8000 points and will now tell us how to play the “new bull market.”
For those of you have read my blog for the last year, you know that I lean on CNBC, conventional wisdom and the financial media pretty hard, as a matter of fact, part of the mission of this blog is the calling to task of the financial media. If you are new, and discovered me on twitter and not through the blog, this is what you can expect as I feel one of my missions is to protect you from the idiocy of financial punditry. If you ignored the media last year and followed my blog you would have been in the very small minority that made substantial returns and your 401k would be a 601k and not a 201k.
So far so good, and we are on our way to another phenomenal year. I’ve said for the last six months that I think it will be important to watch out for any changes of opinion by the pundits that have been correct, the ones that originally called the crash correctly. People like Roubini, Whitney, Shiller and Rosenberg. These are folks that I read and watch closely and they have been a wonderful guiding light for me over the last sixteen months. Some of them were mocked and chided by the media misanthropes that interviewed them over the past year. It ended up only strengthening their reputations and further weakening the media anchors that were non believers.
Please take a look at what Rosenberg had to say yesterday, he has left Merrill Lynch after many years of service and is pursuing some new ventures. Basically he says that folks have unemployment all wrong, it’s much worse and we have all but retraced the move down from Jan 945 level to the March lows of 666.
The financials have clearly led this market higher and it’s fair to say that when reality sets in and the bloom comes off the rose, they will lead the market lower. The XLF has been in a range from 11.50 to 13 and it does look like it wants to at least try to tag the 200 day moving average which is up around 13.50. I twittered in the afternoon Friday that $13.07 was a key short term level as it was Thursday’s high. It ended up tagging 13.08 and pulled back a few cents. If it can break through that level again I think the 200 day MA will be tagged. It will be at that level that we have to decide if shorting will be prudent.
Commodities aren’t enjoying this run because of “demand” or any kind of organic improvement in the economy, it’s been short covering and an anticipatory trade on higher inflation, which in my opinion won’t be here for a while. The fact that our greenback is on its way to being worthless has also helped the sector. Of course it doesn’t matter “why” things move, I’m just being macro.
I can’t help doubting this move as well, I shorted the “bottom” in October for 2000 Dow points and the “bottom” in late December for 2500 Dow points. No I didn’t have puts on the index, I’m not implying that, but I had big shorts in individual names and inverse ETF’s, especially FAZ and SKF whichI took for over 120 collective points. It was difficult and lonely but it was a good call, this call however is much harder to make as there are even less doubters this time and the odds feel like they are against my theory even more this time around ( probably a good thing). We’ll see, and although I am bearish and doubtful, I think we have played the long side pretty well over the last few weeks. I will never fight the tape but I can have an opinion on where I think it will end. In the meantime we need to stay nimble and play what the market gives us. I could care less about being “right” about my macro theories, I’d rather just make money every day.
Let’s look at a few names and remember the BULLS are still in charge and until I see a reversal in direction I wont chase stocks and I won’t be Christopher Columbus on the short side. I will be updating on twitter. Have a great week and it is time to be more careful than ever.
