The market has changed. Starting on February 19th, it was melting at a steady, tasty, almost predictable rate. This is my favorite kind of market.
Over the past couple of weeks, though, as I’ve mentioned on almost a daily basis, it’s been an annoying grind-fest above and below 5725 on the /ES. On Friday, when it looked like we were finally starting to get some selling, the buyers came in for No Particular Reason ™ and pushed it, you guessed it, right back to the same line.
If you’re a bull, what should have happened many days ago is for the /ES to reach escape velocity and for the market to rip toward the much longer-term horizontal shown below. Instead, the market has utterly farted around.
Bulls interpret this as just revving up for the big bounce. Bears like myself interpret this as a failure on the part of the bulls who can’t even get their act together enough to launch from what had been an incredibly obvious base.
Indeed, when I tweeted about this, I got both style of responses, including this one, whose tone I find a little irksome. He seems to think it is the fault of sellers (1 out of a million people) as opposed to the buyers (everyone else) that we’re grinding around.
One particular sector of the market I truly hope has started reversing is the oil and gas producers, illustrated below with XOP. Some serious selling here would help the market in general and would certainly help my XOP puts.
Incidentally, the boys from Gainesville came out with a special report Thursday night which declared that the precious metals bull market may well have ended. I’m inclined to agree, although I’ve taken no positions to take advantage of it. I will note, however, that gold has hammered out a nice little top lately.
As much as I’m bellyaching about the market, I will at least say that Friday, a day on which the /ES and /NQ both ended in the green, my bearish positions were (with one exception) all red, which isn’t terrible.
