Sucks Out Loud

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Well, after 41 months of an (ostensibly…..) countertrend rally, and eleven solid weeks of the latest upswing, it takes a lot of faith (or, many would say, stupidity) to hold out any hope for the bear market resuming. Today definitely did some serious damage to the bearish case. (Although wave 3 is bound to kick in any moment now – cough, cough).

The most obvious is that the ES is now – God help us – at a new high, surpassing even the nosebleed levels set late in March.

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And, far more troubling, the NASDAQ is following its analog quite nicely, implying months more of higher prices. I've put an arrow at approximately where things are equal, if the analog is to be believed.

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Although it's not reflected above, an important driver of a soaring NASDAQ would be APPL, which is threatening to breakout to a target price of about $720.

The S&P 500 index, shown below, also broke above a very important trendline – – this one dating back, amazingly, to the peak in October 2007. Of course, a breakout doesn't necessarily mean a true breakout, just like the breakdown (also tinted) got bears like me excited for a couple of days before making an obscene gesture and going the other direction.

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As I try to find any thin reeds to hang on to, several emerge. First, in spite of GDX strength, the moving averages are still configured nicely for the 2008 || 2012 analog.

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Second, let's face it, the VIX is about to go pre-pubescent on us.

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And third, the drop in bonds (which I not only loudly anticipated but whose low today I predicted pretty much to the penny) seems to be done, unless of course we slice below Thursday's lows.

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So if we get a bounce in bonds, that'll help the equity bears, but here's the problem – – a retracement for bonds would be fairly brief, and I think it would simply make bonds an oh-my-God fantastic shorting opportunity (even moreso than before). So we may find that equity bears get a few days of relief, but ONLY a few days, before things start soaring again. I may have to content myself with being a raving bond bear at that time.

In any case, the past 2.5 months have more or less sucked out loud, and I currently am keeping 40% of my portfolio in cash with no large positions. Friday wraps up OPEX week, and will be otherwise a quiet news days, so hopefully I'll have time to share some specific trading ideas.

Thanks for coming by! Good night.