Sometimes you have to be bullish because everyone else is, sometimes you need to get a little bearish because no one else is. It’s that constant contrarian vs. that “just follow the flow” dynamic. Stocks are back in the land of Pandora right now. I’m long so that’s good. I was 80% long in January, but four of the six shorts I had were were stopped out. It is really hard to short this market. I had a a couple of nice winners on the short side last month, but I felt like I just got lucky. It’s so hard. I haven’t been short in February at all.
The media keeps telling me that there are bears out there. I don’t see any. I just keep seeing the same guys telling me to buy large cap industrials. These are the same guys that told me to buy large cap industrials in 2008. The song remains the same and the analysts stay the same. They never met a stock they didn’t love and the market will just do what it always does. The market exists and confounds us all. I am bullish, but I do have some bearish DNA, and I am wondering as much as the next guy when this thing corrects a little. You don’t have to be a perma bear or a perma bull to realize that nothing goes straight up or down.
But what if we just don’t “really” go down? What if corrections are just sideways moves and/or very very shallow pullbacks that are just buying opportunities?
Europe couldn’t kill this thing and it had every chance. I could easily make a case for a 10% correction, I could just as easily make a case right now for a move to $SPX 1400-1450 without any meaningful interruption. No I’m not licking LSD laced postage stamps. I’m just thinking out loud.
It may just be this psychological tug and pull that continues to walk this thing higher. Will we pull back? Of course we will. Will it feel apocalyptic when it does? I doubt it.
There is way to much complacency right now, the $VIX is ticking higher and $VXX has caught some high volume bids the last three days. Maybe the VIX is bullshit, maybe it isn’t, maybe its a leading indicator maybe not. Frankly I just watch the tape for “tells”, but some are VIX fanatics.
$VXX is an evil mistress and has faked me many times, but it’s getting some attention and volume is there. Head fake? We’ll see.
The tape looks great. I love coal, energy, technology and fertilizers (the latter on a bigger pullback). The biotech space has been fun to trade too.
The beat goes on, but you just may not want to take any long vacations while being very long here, if so, be hedged.
Good luck out there. Only 46 weeks to go. 🙂
$SPY $KOL $XLE $XLK