Recovery Chapter One

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It isn’t every day that you can take a gargantuan, relatively ancient company like Boeing and see it appreciate over 50% in the span of a single trading day, but that’s the kind of bananas market we are in right now. From $90 yesterday to $140 as I’m typing this. Normally, for Boeing, a 50% gain would be fantastic over a three year period. Not less than 24 hours.

As the day ended on Monday, I was purely bullishly positioned. It was a relief to wake up and see we were limit-up (green tint on the @ES chart below). Once the regular market opened, the strength simply continued. We wound up with the BIGGEST Dow Industrials point gain in history on the BIGGEST volume in history. Impressive stuff.

Taking a step back, the past few days have been extraordinary. The NQ is shown below. Here we see the two instances of limit-up markets (green tint), the limit-down market (magenta tint), and the QE-Infinity boom and instant collapse (cyan tint). Absolutely, unadulterated mayhem!

With the market finally, at long last, making some upward progress, the air is coming out of the VIX’s tires. Prior to March, the VIX was a total snoozer. Having exploded to nearly 90, it’s already shed about one-third of that value.

As my prior numbers have made plain, I don’t consider this recovery rally even close to being over. This is Chapter One. But society’s eagerness to charge back into shopping malls and restaurants needs to be tempered with a dose of reality. After all……………

Interestingly, even with the S&P exploding higher, gold has had a sensational two days. However, this must be taken into a broader context. What I see before me is an imminent reversal. I suspect it would find stability once the froth has blown off, but I certainly wouldn’t be a buyer here.

One last thought: one doesn’t simply rip 12,000 points off the Dow and have people cheerfully skip and sing their way to lifetime highs. There’s been massive amounts of financial damage ($30 trillion+) and a lot of psychological trauma. The aforementioned “chapter one” was the easy part. As you can see below, the entire month has been a progressing series of renewed hope followed by disappointment.

I do not expect the market to be broadly safe to short until 2700 or so on the S&P 500. In the meanwhile, however, I do see charts here and there, in small numbers, which are intriguing possibilities, as my Are You Nuts? post this afternoon indicated. At this late date in the quarter, I’m honestly trading in an extremely light fashion. 80% of my funds remain in good ol’ cash.

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