A Thousand Points of Right

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What’s the trend been lately? Let’s put on our biggest thinking caps and try to figure that one out:

0518-ES

I think “Relentlessly Up” would describe it succinctly. May 1 was the only day that was sorta-kinda a down day. The bears – of which I am one – look pretty much like clueless, stubborn idiots. In the midst of all this, I’ve noticed a weird “amping-up” of bear-bashing on the web. Well-read blogs – – blogs whose authors I respect – – are, on almost a daily basis, writing screeds about what dorks bears are and how foolish anyone is not to be riding this merry market up to the stratosphere.

It’s not like a bull market just started. We are, after all, well into our fifth year of this thing, and by all historical measures, it’s very long in the tooth. But, just a few weeks ago, it’s like everyone suddenly gained Transcendental Insight and are declaring the handful of bears that are left to be complete nincompoops.

This may well be the case. If God came down at this point and told me this bull run had – – I dunno – – three years left, there’s no reason I have to be shocked. Everything about this rise over the past nearly-five years has shocked me, in terms of both magnitude and longevity. If you want to see how profitable it has been on be bearish, look no further than the chart below, which is a publicly-traded fund that specializes in carefully-selected short positions.

0518-HDGE

Now I have, let’s be fair, made some really good calls, even recently. My bearishness on miners (which was met with tremendous derision in 2011 and 2012) has obviously been really solid, and the same can be said of my views on Apple. But being generally bearish in the face of one of the most unidirecetional markets in all history has been both painful and unprofitable.

One of the worst aspects of the past few weeks has been that prices are violating major trendlines which, for many years, have been reliable resistance levels. I’m not sure if the prices are simply doing a “Pinocchio” or if we have truly entered some new phase of an epic bull market. Overshoots, of course, can sometimes happen without such consequences, as illustrated here.

0518-COMPQ

One of the very few silver linings in this mess is the EUR/USD which, in the wee hours of Friday, finally violated an important support level. FXE is far and away my largest short position, and although it’s disappointing to see how resistant common stocks have been to the EUR/USD selloff, I am starting to realize that trading less-obviously-manipulated markets like the FOREX might be a better way to go.

0518-EUR

Miners continue to get completely monkey-hammered. The support that we might have experienced at the current Fibonacci retracement levels completely gave way on Friday, and at this point, I wouldn’t be surprised to see selling accelerate. I keep reading how bad sentiment is with respect to precious metals, but I’m starting to think sentiment is a big pile of crap in terms of predictive value. Sentiment has been sky-high on stocks for weeks on end, and that sure as hell hasn’t done any good for the bears.

0518-HUI

At this point, the best the bears can hope for is a retracement in prices back to prior breakout levels. Any honest-to-goodness topping pattern of import would take months to form at this point. But even a pullback in the midst of a broad uptrend would be welcome, because we’ve gone so high, so fast, that even a mere pullback could yield some very good profits.

0518-TRAN

My deepest dread is that not only are the central bankers winning, but they’re going to keep winning for a long time. The Great Experiment has had stunning success, at least on the surface. And, frankly, the surface is all that anyone cares about.