The market continues to stay resilient based on hope and based on the belief that the economic data is showing a possible bottom. Maybe it is. Who am I to say? Well, I am not to say but there are plenty economists out there who are saying there is still a lot of pain ahead of us and it isn't hard for me to read the data and see that things are not getting better.
Take the housing number. If that number came out 6 months ago, the market would crash. The number is really horrific given that the average home price fell yet again and interest rates are at all time lows. Given the interest rates and the avg house price, housing should double! Yet, it only barely beats estimates. And the media jumps on it as great news. The housing dilemma is over. Everything is fine.
Take the unemployment number. 640K more. Yet the media pundants praise it as a sign of the bottom. 640K new workers unemployed is good???? I am so sick and tired of hearing this.
Look, I am not a bear just to be a bear. I am a bear because I see the reality. And I post this blog mostly for my own sake, but also for yours. If you want to go long, go ahead. If you want to put all of your 401K money back into large cap growth companies, go for it. But don't come crying to me in 3 months when we have tested the bottom again and you lost.
Longs should consider taking profits or protecting their profits via hedges. As a short, if I had not played hedge positions at every corner, I would be crushed right now. Instead, I have helped limit my paper losses, taken profits on some big hits I made and I am quite comfortable in my current short positions.
Now, if the market goes to 1000, well then I will be hurting. Lets see what happens.
AMX is going to correct. As are some of the banks (not all). The VIX barely moved today and is actually getting closer to the 20 dma, rather than farther away. But it still hasn't crossed it so until it does so and we get a 2-3 day decline in the market, there is no evidence the bear market rally is over. TA says it should be. Today represents a double top situation. If the market can top 880, we are headed higher. If it can not penetrate 875, we are headed lower.
Lets see and please, learn to take profits when you can and make sure you have strategic hedge positions whether you are long or short.