Fast and Furious

“Fast and Furious” is how I can describe the rally we have been seeing so far. As I mentioned earlier that this is the most healthy rally I have observed so far in this almost 17months old bear market. Albeit, on a psychological perspective, I am not yet convinced that this is the start of a new secular bull market.

I won’t go into tons of statistical data (The internet is filled with that). Let me keep it simple. What’s driving-up the markets?

  • Is it the fund managers/institutional money that “needs” to be in the market because You won’t get paid any performance bonus for “Zero” return?
  • Or flow of money that doesn’t want to “miss out” the rally as they missed getting out of the market crash?
  • Oh yeah, how about the “positive” news that says that rate of decline has declined?
  • Or is it the poor short seller being grabbed by the neck and held against the wall?

Too much of bullishness, too much of intelligences and too much of love for stocks and eagerness to “pick bottom”; hardly a sign of “exhaustion” or panic” or “hate” for stocks, something that is typically associated with bear market bottoms.

And oh btw, where is the value? If this is the deepest recession since world war-II, then shouldn’t we at least expect the stock valuation to reach equal to past bottoms of at least comparatively milder recession like 1970-74s, or the early 80s.

Net, what’s my bottom line? I am bear but I don’t want to trade against the trend as well, which means I am delta neutral to short delta, in general.

And oh yeah, here is my comment on Goldmand Sachs going into earnings-

GS May find a temporary resistance at 129-130 area…may look for temp intraday… They do have one of the best run since lows below 50 last year. But too soon to fast Smiley..they are announcing earnings tomorrow morning and my bias is that they will beat it..and guess what no one can really estimate the impact of mark-to-market relaxation so quickly (was it intentional???) chances are that will be upward surprise…and oh btw, banks have been told to keep mum on stress test results…

Times for being cautious.

Trade Carefully, Trade Profitably, OP






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