Quick update

I'm still trying to recover from jet lag. My daughter is the biggest preventer of this and it doesn't help that she's struggling the most and is sick. As far as the market goes, I'll say this....nothing has changed much since I've left and returned. The market is more or less where it was 6 weeks ago. I still sense that there's a large cohort of market participants who look at the market with contempt and are quick to run for cash and hunker down or make bearish bets anytime the market shows a hint of weakness including some noted bulls like Cramer. So long as we keep seeing this type of behavior it will be difficult for a significant correction to take place and more importantly, it suggests the bull market is alive and well.

The main worry out there that I sense right now is the potential for a hard landing in China. So far there hasn't been any material evidence of this concern coming to fruition nor have high energy prices had a material negative impact on Q1 earnings but both of these things could change by next earnings season and that's when we could see a material correction take place. In the meantime the market will probably continue to frustrate bears and possibly make a run back to the highs. That's my best guess for now.

The bottom line is that for any kind of notable correction (drop of 5%+ from the high) for whatever reason to take place it requires complacency from ST trader types and hedgers. They need to drop their guard and embrace the uptrend and that simply has not been happening. You can see it in the daily put/call ratio readings which for weeks have indicated that these folks have had their guard up. On Tuesday the put/call ratio closed at 1.15 which is consistent with ST bottoms.

I suspect that sometime this year we will get a situation like in September of last year where the market is well oversold on an IT basis and we see something like a 2:1 ratio of bears vs bulls in the AAII sentiment survey. It doesn't require a flash crash for this happen. A sideways market or a series of mild declines can do the job similar to what happened from March-September of 2004. Don't be surprised if the market goes sideways or makes additional marginal new highs before we get to this type of situation.

My strategy continues to be the same as it has been coming into this year....maintain core longs with a sizable cash position until we see a situation as described above. If I spot a really good individual story stock or a trading opportunity of some sort I would be willing to commit cash to it regardless of the general market.