How Crowded is Crowded?

On the one hand, everyone I know is short. And everyone on the sideline wants to short. So clearly a crowded trade right? One that could easily become the shadow demand for equities on any dip, only propelling them higher, right??

Well, yes and no. Crowded shorts could raise prices, though that ignores the effect of the value : price spread.
And it makes less sense if you consider every 1m shares short is 1m shares someone is 'artificially/additionally' long. Shares HELD by A are shorted by B to the buyer C. C will sell long at some point and B will buy short. The only reason this should have any effect is the velocity of the shares coming to the market. Right?

So, it 'could' keep 'crowding higher', EXCEPT that the numbers seem to point to a low level of short interest.

As beleaguered as the bear crowd must feel, the truth eventually hits. The only thing to be mindful of, is the chance the bears could be wrong.... and the truth might already be out (ie, V shaped recovery.) Maybe.


Lastly, the market is at yet another crossroads since a break above 1072 or a break below 1040/1035 will likely dictate the mid-term direction to follow.

To torture the Charlie Brown analogy even more: Charlie is about a foot from the ball and Lucy looks like she had no intention of pulling the ball away. Looks like.

Well, That Was Unusual

Saw an interesting study recently that said the SPX hasnt had any periods of more than 6 hours (HOURS!) of non-profitability. Ie, you could buy AT ANY POINT since March and be up within 6 hours!!

Lately we've been seeing more of these teaser pauses in the market, and I'd be interested to see if yesterday's peak lasts for more than six hours. If so, I'll imitate Charlie Brown and believe that THIS time is the time.

link to article:
(will find it, check back later)

Just One More Time

Waiting for the market to dip feels like Charlie Brown wanting to kick the ball.
Sheesh.

Completely Inured!

What's left to say about this market?? We've collectively become completely inured to a market which relentlessly, ceaselessly rises in the face of deteriorating reality and a growing list of reasons why it can't go higher. Historic economic and pricing conditions are no match for a melt-up, so far.

The only thing I can say is it's stunning how many stock charts are at multi-multi-year resistance levels... not that that's any reason for this market to pause, much less to drop!

TAKE A LOOK AT THE POINT AND FIGURE CHART ABOVE. It's the NYSE Bullish Percent, or the percentage of stocks in the NYSE that are in bullish charts (roughly) - it's at the highest its been since at least 1999!!! (the charting function only goes back that far, not sure about before that.) Not that that will matter. GRRRRRR!

Still waiting for any hint of a change in bullish direction.

Getting closer and closer

To the top, by definition, as we rally...

The relentless rise continues, and the market has clearly gotten ahead of reality (and it has for about 100 spx points!) but the beauty of bubbles is that they always go for much longer than you can imagine.

Not sure when the dip happens, as there is not alot on the charts to help define that, now we're left to wait for the fundamentals of this economy to be felt.

Waiting for a break of any support to start to look for a bear trend... 1035, then 1018ish.


BTW, Aditya had a very interesting piece of analysis on the last post's comments section, check it out and let us know if you have any thoughts on it (in the comments there, plz)

Bored Of This Market Yet?

The week before the holidays seemed to be yet another bear tease - diet peanut butter if you will.
And the last couple of days have seemed like the resumption of the same old relentless bull run.

Not so.

Markets are well known to look for the maximum pain that could be inflicted on the maximum number of people. Thus the dumb money/smart money divide. The market's nature is to build bubbles in complacency and outlook (also called a meme) and then to burst them spectacularly.

This recent action is yet another piece of the topping process - conditioning investors to expect rallies. I'd say we're about there. Think about it - what would surprise you the most right here - it would be a plunge.

Last week's action had all the marks of a truly strong trend, one of which my colleague Elliot pointed out - good news was met with selling. I'm perplexed that this week has had a strong trend, on the bullish side. But I'm of the opinion this is the last bit of conditioning.