Zeev...
We shall see. Like I always say, I am no virgin when it comes to being wrong, and if this is one of those times I will just have to adjust my trading accordingly. I knew that your going into the weekend with very little cash reserves was not by accident - that was never in question. And I agree completely that there will be one or more cyclical bull markets before the secular bear is ended - I just do not think now is the time (if I read you correctly, you do not think so either).
I see the rally to 1520 as being artificially extended (just as the 7/24 and 10/10 bottoms were artificially induced) and think there was a good bit of underlying distribution on the way up especially near the end - it was just masked by the mo-mo buyers and short covering with help from the Fed/PPT. By all I can find, insider selling has been relatively substantial lately, especially in selected areas, but I normally do not put a lot of trust in those numbers unless they get seriously out of whack - there are too many factors that can skew the numbers, both for buying and selling, and insiders can be notoriously wrong. The heaviest insider buying in years came about this time last year and they were absolutely dead wrong.
Finally, and to me the most important factor, the fundamentals are very poor from almost any measure you choose. Christmas sales are going to be far below the optimistic expectations of only a few weeks ago and profits are going to be even worse. The consumer is finally tapped out, increasingly unemployed and underemployed, and not in the mood to go on another buying binge. The auto boom is over, and I suspect the same is true of the real-estate/re-fi boom. There is no driver left for the economy and no other potential for asset building for a new source of funds unless they can drive the market back into stratosphere, which I do not think they are capable of doing.
I continue to believe we are headed into a recession and it will be long lasting and global in nature. I may well be wrong, but I do not think the Fed can prevent it and their recent actions suggest they have similar worries despite protestations to the contrary. There are just too many forces at work that are out of their control and every move they make to solve one problem exacerbates another, such as when the dollar falls (absolutely necessary) along with weakened markets it will probably accelerate the slowdown of capital flow into the US, making our current accounts deficit untenable. At some point, the flow could well reverse and that would bring very serious consequences for our economy and markets.
I think we do agree somewhat on the overall big picture, with me being a bit more negative in my outlook. I still think that it will take serious support and intervention from the Fed/PPT for your shorter term scenario to come true.
Like I say - we shall see.
Good luck to you.
mlsoft
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