Early this week, when Ms. Whitney was getting this torture-fest started, one Sloper mused, "Who are they going to bring out next? Roubini?" Well, life continues to be stranger than fiction. I was stunned to see Roubini's optimism being held up as the latest evidence of the new bull market. Amazing. Just amazing.
The weakness we saw from June 11 through July 12 has been swept away. If you look at the NASDAQ Composite, the entirety of last autumn's bear market has been retracted. We are just underneath the unfilled gap, and we are at a new high for 2009. Lovely.
There are opposing currents and eddies all over the place. Take a look at the S&P 100 below. The magenta portion is the pattern that shall not be named (and which failed gloriously). And the green pattern, much larger obviously, is its bullish doppelganger. It is conceivable that the S&P 500 (a different index than the one below, but highly correlated) could return to the quadruple digits as soon as next month. I, for one, remain very uncomfortable going long in this market.
I remain cautiously bearish on energy. I'm long DUG and short OIH.
Unless some miracle happens tomorrow, this will go down as the work week in my life as a trader. On the whole, I did a very good job following my rules, so I don't have a lot of beating-myself-up to do. The simple fact is that I was very badly positioned for this rally (to say the least), and this run-up, for me, was quite unexpected. I will climb out of this hole, but it's going to take a heck of a lot longer than four days.
