Three Reasons for Bulls to Worry

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0527-catI hate to fall into the “Enumerate Your Post” trap, but my goodness, it certainly seems to work everywhere else on the web, doesn’t it? MarketWatch has latched onto this with a vengeance, with their latest schtick being “X things that Y won’t tell you”, and apparently there is no limit to vapid topics they can tackle with this formula. The most recent, pictured above, is the single most popular article on MarketWatch. Good Lord.

In any case, I wanted to offer up a trio of thoughts about why bulls maybe shouldn’t sleep as well as they’re inclined to……

(1) Things are quiet………too quiet: When’s the last time the market had any bad news? Honestly. Think about it. Things have been Hunky Dory for what seems like forever. What would one genuinely piece of Oh Crap news do to this priced-to-perfection market of ours? On top of this, have you taken a good look at momentum stocks lately? I mean, sure, I love Tesla (and have talked about it ad nauseum here on Slope, being bullish the entire time), but don’t you think the below chart is a bit much for a company that not only has a very thin profit, but whose profit is largely coming from government-sanctioned, carbon payments from other car makers and not actual profits from product sales?


Or, to take a different look at things, take a look at the ultrashort ETF below. Do bull markets go on forever? Have we, once again in human history, decided that there is no such thing as a business cycle? You be the judge.


(2) Very few could consider current prices a buying opportunity: Even the most Cramer-ish of bulls could not, presenting a chart like the Russell 2000 below, speak earnestly about the good values that are around us. The best they can muster – – and they are ALL saying something like this, as if it’s some kind of verbal insurance policy, is: “We all know this is going to end badly one day, but who knows when that day will come, so make money on the long side while you can.”

And, failing that, if they’re really desperate for a reason to encourage buying, they have to whip out something that would have been considered hysterical a few months ago……..because it’s freakin’ Tuesday.


(3) The Euro is at the edge of a precipice: Probably my favorite of these – – the Euro is getting closer and closer to a very exciting plunge. Even the market action over the past couple of days has been encouraging to this goal.


Taking a look at the bigger picture, below, you can hopefully see my reasons for being excited about the prospective downside. And, let’s face it, if the Euro goes into a serious free-fall, it’s going to drag stocks with it.


And with that, my friends, I shall bid you a good evening and look forward to seeing you here again Wednesday morning!