Chinese water torture continues for bears

How agonizing must it be for anyone who's been short the market. It's just been an agonizing grind higher. Even for those who were just short for a quick trade has been ran over. I'm sure these bears were saying "finally some relief!" when non-farm payrolls came in a disappointing -85K but no dice! This negative number is will keep the fed on hold until at least April and squash the growing chorus of an earlier than expected fed rate hike (for now).

Earning seasons approaches and from what I've been reading, it's poised to be good one yet again. The Bear's only hope now is for some sort of a “sell on the news" reaction. I've been saying this for months...anyone who has been short the market longer term is running uphill against the wind. We are in a situation quite the opposite of 2008 whereby the earnings were deteriorating, constantly below expectations while financial stress in the form of credit spreads, CDS spreads and the like were rising. It's these sorts of conditions when you want to be short. Sure, you could say that at the start of bear markets these types of fundamentals look their best but until they turn in the opposite direction you are just guessing as to when that turn will happen and more often than not you will get run over. Trends tend to feed on themselves and last longer than you think possible and besides, we aren't even at extremes yet with respect to how good things can get and we still unwinding from historical once in a generation negative extremes.

I like to visit the message boards on Yahoo to see what the typical "yahoo" investor is thinking....pun intended. I continue to notice strong disbelief of the sustainability of this rally. You would figure that as the market makes new 52 week highs there would be people posting messages bragging about how much money they have been making. Instead, I continue to see angry posters complaining about the market for the most part and the occasional confession about how much money the person has LOST! I realize this is contrary to what you see in some of the sentiment surveys but it clear to me there's still quite a large hoard of investors out there still bitter, skeptical and bearish and that's great news for long term bulls.

Check out this post I read which is a popular view amongst the retail ilk

Retail investors ARE NOT IN THIS MARKET 9-Jan-10 02:16 pm

Because it went up to fast - And against all fundamental economic facts. We kept hearing, "Market is pricing in recovery" - While mega companies were going bankrupt, and big regional banks were being shut down (and still are), while Gold was ramping to new highs, and housing was falling through the floor, and jobs were dropping at 500 thousand per month. Most of these facts are still the case.
The market was not pricing in anything, it was "being made" to price in recovery. RETAIL investors never had a chance to get in - as they usually don't. No one believes how we got here to begin with, and no one in their right mind would risk a dime betting it goes higher from here. The risk vs. reward would stress a battle tested trader/investor...Never mind Mom & Pop's conservative 401k that got out a 70% loser back in April.
When Govt and the banks realize they threw a stock market party and nobody came, and this has become a futile exercise of Goldman's quants swapping spit with the machines at Treasury - The party will most certainly come to a disasterous and humiliating halt.

So long as I continue to see plenty of posts like this from the rookies and wannabes it makes me comfortable being bullish longer term. For anyone who is still idiotically convinced that the market has been going up only due to the so called PPT or GS take a look at these charts.





Can the "PPT" control credit spreads, retail sales and unemployment claims? And what about the stock markets all over the world which have rallied? Do you honestly believe they are responsible for that as well? Such a load of bullshit and a symptom of denial by the bag holders who refuse to admit how badly wrong they have been.

The SPX and NASDAQ have made fresh 52 week highs. I've said before that a new 52 week high tends to result in yet another 52 week high. I know things are stretched here and the market has a "running on fumes" feel to it but this is what you see during the first thrust of a new bull run and pain is often what you feel when you pick tops or bottoms. Eventually there's going to be an abrupt pullback that will give back a lot of the gains that were made in the weeks prior...eventually. But when? Contrary to what you may expect, I believe such thing will happen after a positive catalyst - something that gives enough bag holding shorts reason to throw in the towel and force underinvested bulls to chase. At that point you get an emotional buying climax.....similar to selling climaxes and then you can see a "sell on the news" reaction. For instance, if we would have seen a strong jobs number on Friday, that may have done the trick for enough bear bag holders to say "Ok now I'm fucked. I better get out of the way before I get killed even more". Instead we got a negative number which kept the hopes alive for the bear bag holders and their lack of capitulation gives support to the market. But one by one as the market grinds higher they give up. I think if we see a bellwether company or 2 reports a strong quarter enough of them will give up to allow for the market to go down in a meaningful way. But that's likely going to happen somewhere in the 1160-1170 range I suspect. It's just a guess on my part. I for one am not playing this game of chicken and continue to focus on individual stocks which have done really well for me. My number one stock has been Bennett Environmental. It's made a huge move and I’m sitting on big gains but I still believe it will go a lot higher given the big earnings that it has in store for 2010 which should be $.80-1 per share.