Quote from rhymeswithorang:
right, durables goods will do it. If not that one, then GDP will do it. Take a look at the spec positioning in stock index futures, they have a massive short. SQQUUUEEEEEEZZZEEEEE. Bull mkt, goes up on bearish news, goes up on bullish news. Faders never prosper.
I never said to fade this market - not just yet, at least.
I am saying it will not be rewarding to be long.
Every piece of ammo has been used to prop up these share prices, and it is not coming from retail inflows. Share buybacks are at record levels, Mergers, LBOs, general Private Equity 'borrowed money (OPM) chasing over-priced assets, etc. has been used to prop it up.
Everything had a beginning and an end. And so it is with this cycle. The housing boom has definitively ended, retailers are seeing it, liquidity on the consumer end is shriveling...
I think we'll see terrible durable goods' numbers tomorrow, and none other than the CEO of KB Homes is telling us that the new home number will be fugly, too.
Here is the paradox: Nothing further will boost this market until the fed cuts rates, and maybe those cuts will have to be deeper and more sustained than what people assume now, because of the extent of the housing/mortgage damage.
But the fed won't cut until the economy fundamentally expresses capitulation, most likely taking stocks with it.
To those who say "but I thought you were bullish," I can only say I was, but reserved the right to change my mind.
I am bullish long term. There is no question about that. But if we see slack in the American Consumer, which is a rare event, but may be happening now, it will even dent China, over the short term.
The Target number, along with gas prices, and what will most likely be weakening jobs data, is setting up a nice stage for a summer correction that will hopefully allow fall bargain hunting if the fed can manage to avoid a dirty and nasty recession.
