Another bearish extreme but it may only be good for the ST

Another key piece of sentiment is showing a bearish extreme. The National Association of Active Investment Mangers measures the net long exposure active managers have. The latest reading is 4%. This is pretty much as low as it has gotten even during the 2008 crash.

Keep in mind however that this is more of a ST timing indicator. It does tends to give more accurate contrarian buy signals then sell ones which is good for the bulls here but again, the current low reading may only turn out to be indicative of a ST/IT bottom and not a LT bottom. Take first instance the bottom in August of 2007, January 2008 and July 2008 when there was a low reading similar to today's. At those bottoms there was clear symptoms of  the impact sub prime debt was having on the economy which created an oversold market and a lot of negativity. Then, for one reason or another the market bounced for a few weeks on hopes that the worst was over or that the market had "discounted the worst"  but of course that wasn't the case. The major economic damage still lied ahead along with the clean up process of restructurings, recapitaliations and government programs such as TARP. People kept underestimating how quick and severe earnings and the economy contracted.

We could very well be in a similar situation today as we were when the market hit temporary bottoms in late 2007 and the first half of 2008 whereby negativity became acute, and the market was oversold. But it seems inevitable to me that before it's all over the tough medicine will have to be swallowed i.e the haircuts, recapitalizations and TARP like programs. I don't know if that will take 1 month or 1 year to fully play out but I think it will happen.

As always I'll keep an open mind as to how this may all unfold.

Perpectives

First, let's talk sentiment. The latest reading from AAII is showing 2:1 bears vs bulls. In bull market conditions such a reading would signal a signficant bottom but in bear market conditions, it's only good enough to signal a bounce at best.  Last summer we saw AAII sentiment hit 2:1 bears vs bulls or more three times before the correction was over.  Given that conditions now are worse than they were last summer, I'd expect to at least see the same before we see the final bottom.

Here's a mussing from Alan Farley a trader who writes on realmoney.com

Death of Equity Investment

We're entering the 3rd bear market in the last four years (if you view the flash crash as a mini-bear, which I do). This is the nail in the coffin for the quaint idea of buying stocks as investments. The public already knows this, which is why we've seen a mass exodus out of the stock markets in the last 18 months. In fact, I think the only ones that don't know it is the Wall Street crowd because they're so immersed in the con game that they have no conception of reality.

Two generations of demographics support this death of equity investment: I’m in the middle of the baby boomer generation and will turn 60 in three weeks.  Folks like me are looking to reduce risk so we can pay for our old ages. We have no intentions of taking our low return nest eggs and betting on the next Internet or Starbucks, especially in a Taco Bell society that has lost its flair for innovation.

Our kids, aka the next generation, are dead broke because the old folks in power have abandoned them. They know better than we do that Wall Street is a rigged game because they’ve grown up to an evening news environment that’s bombarded with financial crisis after crisis. Maybe that’s why my two grown children want nothing to do with this industry. Meanwhile, the financial elite have sucked the life out of healthy trends in real estate, raw materials, Internet and a dozen other growth sectors with artificially-created bubbles that are now broken beyond repair. They got rich while their customers got lectured about personal responsibility and thrown out of their homes.

This is fine for me because trading isn't investment, which still works, so I can stick around and turn out the lights and lock the doors when it all ends.  But, to tell you the truth, I find the whole thing quite depressing because capitalism is a beautiful thing, when done correctly.

The above reminds me of the famous Death of Equities article in Business Week back in August of 1979 which talks about how people had given up on the stock market after a decade of high inflation and that there was no hope for equities. Of course we all know that in the 20 years that followed we had a massive bull market in equities. 


I saw the following comment made by one of my friends on facebook. 


Another recession on its way.... and all this time I thought we were still in one? This economy is fucked big time.....


When I see posts like the above two it makes me want to hock the house and go long. I've made mention several times here that the bull market was never fully embraced by the public or the investment community. The public still believed we were in a recession, while inflows into equity funds/ETS, although positive in the first few months of the year, were still quite small relative to how much was pulled out. Then you have the retail trading community who complained about the market all the way up. Common things I heard was "low volume" and "rigged by the PPT" and as the market would make new highs instead of excitement I would sense moaning and groaning. All of  this suggested that there was potential for the bull market to climb to new highs because there was a lot of doubters and that it would be quite unlikely for it to end because of that. So now I ask myself will I be wrong about this and if so why? If I'm wrong it will be because of what the permabears have been claiming all along...that the economy was simply a dead man walking and if not for the massive government intervention we would have seen an even bigger disaster after the crash of 2008. Such a once in a century type flood would overwealm any kind of sentiment analysis.  



Back in early April of 2009 I made the following comment


I'm quite open to the possibility (no solid evidence of it yet) that we could see another economic revival like in 2003 to once again extend the end game of the super cycle of debt but if and when that occurs, the next downturn will likely be catastrophic because we can't go to negative interest rates next time to stimulate borrowing and we probably can't see governments increase spending to a multiple of today's already massive levels.


This pretty much sums up the fears of what's going on right now doesn't it? Rates can't be cut anymore while governments have their hands tied due to the embracing of austerity. I'm sorry to say but things do indeed look grim and potentially castostrophic. I'm sure there will be at least 1 major effort by European authorities to combat the crisis and that would likely give the markets a lift but after that I don't know. I mentioned before how China could be white knight to help clean up Europe but I'm seeing more and more stories about how bad local debts are starting to surface in their economy...it seems like they are experiencing a hangover from their stimulus plan in 2008. Meanwhile, the bickering in Washington continues.


Let's look at what's happening right now. Market action is shitty. We have global markets led by the BRICs making fresh 52 week lows. We have economic data that is showing weakness and there are many things in my opinion that need to be resolved 1) a restructuring of PIIGS debt and 2) recapitalizing of European banks. How and when will this be done? What will be the economic fallout as a result? 


I get the sense that there's a lot that go wrong with all of this. Now look, with the VIX at 40+, AAII at 2:1 bears vs bulls  and the 10 year at 1.75% I realize the market is ripe for at least a relief rally...perhaps ever a very strong one on just any kind of favorable progress made in Europe. But at the same, I also get the sense that we could just as well see things unravel more and it gets really ugly. It seems as if it's just a matter of days before we see bank runs and major bankruptices in Europe.  


I'll end by saying what I've been saying for several weeks now.....wait for this shit blow over. There's an unresolved crisis, economic momentum has deteriorated and all the while the markets around the world are at fresh 52 week lows. All of this says that the bears are in control and while it may seem too late to go short, it also seems too early to go long aside from ST trading opportunities. Sentiment is very gloomy but remember markets can go higher or lower a lot more than you think possible and a lot faster too. Respect momentum and right now momentum is to the downside. This line of thinking kept me from getting ran over in 2008. I'm going to continue doing what I've been doing and that's a whole lot of nothing. 

Will this turn out to be like September 2010 or September 2007?

First of all, the lemming bears are at it again. The put/call ratiowas sky high this morning in the face of market strength. This time however, the market is not ST oversold so the less of chance of them being squeezed  like last week but it still remains a decent probability...at the very least it suggests you stay away from the short side until you see them back off.

When things seem utterly hopeless and the bears pile all it takes is some marginal good news to rip them a new one and that's what happened and may continue to happen. It's a game of chicken though, because the fundamentals are in fact deteriorating which warrants being bearish but Mr. Market rarely likes company.  Have you noticed that some of the market leaders namely, Apple and Amazon have made new highs? Amazing. Having your market leaders lead is good sign for the bulls but is this the result of people simply "hiding" in these growth names?

So, there's talk now that Greece may end up getting the next tranche of bailout funds which would keep them afloat till the end of the year. That's probably why the market is ignoring the lemming downgrade of Italy by the new tough guys of the world  S&P. Italy is in bad shape? Gasp! Wow, S&P you are so forward looking and market savvy...nobody had any idea the PIIGS were in trouble! Ok, so if Greece does indeed get more bailout funds it could very well be the catalyst for the market to breakout higher simply because too many bears have been shorting the market. Unfortunately, European authorities are in denial and are ignoring the bond market which is saying that Greece is doomed to default. It appears they are throwing good money after bad and if Greece keeps struggling, which they likely will, the next time they come back to the through it would most likely be game over. You can sense that people are completely fed up with these bailouts. Merkel has taken a political beating because of it.

A lot of what's going on reminds me of  late summer 2007. August of that year is when we first started to see  material impact of bad subprime to those who were directly exposed the most. The market sold off sharply as mortgage companies were going bankrupt and major hedge funds were getting wiped out.  Then, just like now, there was massive insider buying on the selloff,  which I recall hit a15 year high.
The fed came in, cut rates and provided liquidity which caused the market to rebound and actually make a new high for the year! We all know what happened afterwards in the months to come. So, as you can see, the market never makes it easy for the bears especially since most bears out there using ST trading tactics which makes them either get stopped out on the rallies for losses or cover far too early on the declines.

I've been LT bullish since the summer of 2009 and I turned ST bearish this summer expecting a consolidation with mild to moderate downside and exited positions substantially accordingly.  At the time I thought I was playing a dangerous game doing this because I was trying to avoid ST weakness in the context of what I still believed was a LT uptrend and when you do that you run the high risk of being left of the side lines as the market goes up without out you. Lucky for me the prudence payed off. As things have been unfolding I find myself becoming more bearish for the intermediate term (2-6 months) and perhaps long term. Economic fundamentals are rolling over while policy makers are making mistakes (in my view). The similarities between subprime housing and subprime Europe are quite eerie. You might be saying "what about all of the talk you were saying about how skeptical and pessimistic people were througout the bull market which meant it still had a ways to go?" Well, all I can say is that sentiment is only one aspect of the equation and it has it's limitations. During the bull market we had negative sentiment in the context of improving fundamentals (earnings and credit conditions) - that's when contrary theory works best. But when you have pessimism in the context of deteriorating fundamentals it doesn't work nearly as well because pessimism is justified....at best it can result in temporary rallies when it gets acute.

The bottom line is that I believe the foundation for a bull market advance is no longer there. I wouldn't call myself a full fledged bear yet but I'm on their side in the intermediate term. In the ST, it wouldn't surprise me to see the market go higher still because bears have been too aggressive betting against the market,  but I don't say that with the confidence I had last week when bears were piling in because the market was ST oversold wheres now it's not.





 

Authorities dealing with the symptoms not the problem

Alright so we got the short squeeze that I saw coming. Unfortunately it looks like just that....a short squeeze and not the start of sustainable rally that ends this rout we've been in since July. News that China is buying bonds and Central banks are willing to provide liquidity to European banks were likely the triggers. Like I said, it could have been anything.

I read an article in the post today which talks about how European banks were reluctant to lend to each which was exactly what happened in late 2007 and 2008 when the sub prime started to go sour.  Adding liquidity to the system did nothing to solve the crisis. Ultimately, the bad assets had to be expunged via TARP and the banks that were exposed to them had to be recapitalized, merged with a stronger bank or let fail. Ultimately, I think this is what is going to happen in Europe. It could happen next week, next month, next year who knows....but until it does I have my doubts the market will be able to go back to bull mode.

Unlike with sub prime and MBS which  due to the slicing and dicing of mortgages were complicated messes the exposure of" sub prime European debt" appears to be a lot more transparent. Once authorities come to terms with reality (realizing that restructuring/haircuts/bankruptcies have to happen)  hopefully, they have learned from 2008 what to do and what not to do (such as letting banks fail like Lehman instead of taking receivership like Bear Sterns).

Timing is everything. A lot of bears saw this crisis happening over 2 years ago and they either shorted the market or stayed on the sidelines and got wiped out or embarrassed badly as the market went up 100% from the bottom.  I don't care how smart you are or how times you said "see I told you so"...if you can't translate your predictions to making money, you are a loser and are no better than someone who lost money because he was outright wrong about the market.

It still remains to be seen if indeed the bears will be right about Europe having to bite the bullet....I think they will have to. Now, this doesn't necessarily mean we will see 2008 all over again. If  the right steps are taken the damage could be a lot less. China is really the only country out there that has the fire power to contain the damage. They indicated their willingness to help out but I don't think they are going to be willing to throw good money after bad in a material way. They have been buying bonds but they have been token purchases from what I gather. If the haircuts are taken and the bad assets are expunged I think the Chinese would be then be willing to make a major move in recapitalizing the system.

We are just going to have to see now how this all plays out. If I end up being right we will see at least a retest of the lows at some point but in the interim, there's going to be sharp rallies just like we've seen this week. You think Mr. Market is going make it easy for the bears to profit? Not a chance. When the market gets oversold and bears pile in like they have been they will get crushed. Go take a look at the last 2 bear markets to see just how sharp rallies can be.....we're talking about rallies that can  last more than 2 months and rise 20%+.  Bear markets destroy both bulls and bears and yes, I'll call it a bear market because it's acting like one but by the same definition, last summer was also a bear market abliet a very short one, therefore, it's possible this could be short one as well but until the market starts acting in a way that suggests it's over you better have respect for it and so that means the best course of action is to remain mostly in cash until it's over.

Is it possible that we can kick the can again like we did last year? Sure, but I don't think it's likely. The damage done to the banks in Europe and yields on Greek debt suggest to me that the condition is terminal and there's no turning back. Again, it could take days or months for this to play out much like the life span of a terminally ill cancer patient but my gut is saying that it's not going to be hunky dory for another year like last time when the market rocketed 30%  for 6 month.  If I'm wrong, hey, it won't be the first time and hopefully I will be able to adjust but as of now I just cannot be a strong holder of equities given what I see out there. ST trading opportunities will present themselves but the headline risk is ultra high right now to make me comfortable with those either.

I've whittled down my exposure to 20% with a position I'm comfortable holding for the LT no matter what happens and so I'm in a position to be able to be patiently sell into strength at favorable prices if I see the opportunity. That's my  game plan at the moment.

asinine put buying

it could be option expiration week related and I know I micro analyzing here but the put call ratio is currently at 1.57 which is asinine considering that the market is modestly up today. If we close the day flattish or higher with this type of reading it would make the market very ripe for a massive short squeeze....all it could take is for some flimsy piece of good news like Bernanke saying  that he switched from boxers to briefs.  New bear market or not, whenever you see the bears pile in like this they get tend to get spanked.

Just get it over with already

According to bond markets, some sort of a  Greek default is immanent. Greek 1 year bond yields are at 90%. That's pretty much a lock that a default is immanent. Just now I read an article that says that its expected that Greece will receive it's next tranche of bailout funds and that officials are denying speculation of a default. lol! Who are you going to believe? These "officials" or the debt markets? The market is pretty much saying that further aid will either not be forthcoming or won't make a difference if it does.

Now, I realize the market is ST oversold (but not extremely so like it was near the bottom last month) and the gloom is really thick which argues taking a contrarian stance but I've always said that using sentiment is more an art than a science. You need to take into account the fundamental backdrop and with what appears to be an immanent default by Greece, bearish sentiment is justified because of  the contagion effects that are possible due to this black swan event. Now, that doesn't mean that in the interim there can't be a sharp rally right here on any kind of marginal good news to clear oversold conditions and punish bears who are pilling into bearish instruments (puts), but playing that game of chicken with other traders is not for me.

ST bounces aside, in my opinion, the market will not be able to resume the bull course until we at least see Greece default and/or restructure. Last summer we got away with just putting a band aid on, but I doubt we can see a replay of that this summer. I know the bears have been saying this for a while to no avail but I think this time they are right when they say that the can kicking needs to stop. When I say right, what I mean is that I believe the timing is right because it seems to me that the market is demanding it whereas before it was willing to ignore it and accept temporary solutions. Dealing with a Greek default/restructuring would probably result in ST pain but if policy makers can come up with a good clean up plan, it could clear the way for the market to advance later on. It's like puking after a heavy night of boozing...once you clear your system of the toxic booze you are on the road to getting better (btw, I haven't puked in 20 years!).

I would love nothing for this post to be the ultimate contrarian indicator and the market soars back towards the highs right here right now. I'm an optimist at heart and I want to see a happy ending to all this but when it comes to the market I'm a pragmatic realist....or least I try to be. We can still have a happy ending to all this but again, I believe we will have to come to terms with the hopelessness that is Greece first among other things.

Last week I couldn't resist the opportunity to unload more of my already limited equity exposure on one of my positions into strength at a favorable price which now puts me at about 80% cash. I think I was quite fortunate to see this stock (wzl.to) hold up well considering the damage in the market. I'm now in a position whereby my all my stocks would have to go to zero to put me in the red for this year and that's pretty much impossible given the solid balance sheets of these companies...one of which is a shell company with 100% cash and no debt. I think I did a pretty decent job transitioning from offense to defense this year.  I hope I will be able to do the reverse.

1 month post crash analysis

It's been one month since the market crashed and hit it's low point and as I expected, we didn't see any kind of  snap back V bottom that sent us back towards the highs. So far the market looks a lot like it did after last summer's flash crash...one big volatile choppy mess. We have seen a number of days where the market has gaped bigtime in either direction for a  3%+ daily move and often this has happened back to back with a big up day followed by a big down day or vice versa.  That tells you right there that the market is broken and that long term money is on the sidelines. This too was a feeling I had last summer but this time around the volatility and "brokenness" is worse. Now as we all know, last summer's broken market eventually had a bullish resolution. That doesn't guarentee we'll get one this time but at least there's hope that there can be. However, hope is not a viable investment strategy and so until the bulls can prove that they are starting to take back control over the market I will continue to watch on the sidelines for the most part and give the bears the benefit of the doubt.

This choppy action we've been seeing could be base building for a bottom or simply a bearish consolidation that will lead to lower lows...again, to early to say which, but the longer we see this kind of choppy action without a significant break of 1100 the more likely a bullish resolution becomes.  Some people might be noticing what appears to be an emerging rising upward channel in the chart. I would be very skeptical of this channel being the beginning of a new sustainable advance off the lows that powers us out of the doldrums especially since there hasn't been at least 2 months of base building which historically has been a requirement for a market to recover from a crash. It's far more likely that the first move off the bottom that gets us out of the doldrums will be one like  last September whereby it starts off with a surge seemingly out of nowhere and doesn't give you much in the way of dips to get on board.

A lot of work has to be done to restore confidence. I think this time around, unlike last summer, there will have to be a grand, final resolution towards PIIGS whether it's market friendly or not. We need to just get this over with because I don't think the market is willing to tolerate can kicking anymore after the 2 flash crashes we've seen.  Next, the market needs to get a sense that emerging market countries are done with tightening and are switching to an easing stance. We already saw Brazil do this. We need China to follow. Finally, we need to see the US and some other developed nations have the balls to say fuck you to the rating agencies who are trying to be bullies by saying "austerity or else...." and take bold initiatives to stimulate job creation and clean up the housing mess which go hand in hand and doing so may entail rising deficits in the near term. If everyone goes austeric (is that even a word?) at the same time to keep the rating agencies happy it will soon become obvious that the slow or negative growth it creates results in a worse fiscal situation which would then result in further downgrades anyways.

There's a huge debate as to whether government intervention is effective or not. I think certain types of intervention can be effective and history has shown some instances such as Brady bonds in the early 80's,  the RTC in the early 90's and TARP a few years back. If the Obama administration can come up with programs that will effectively stabilize and revitalize the economy in the long run at the cost of higher deficits in the short run they must try to implement them.  I'm not talking about your run of mill Keynesian government spending that gives the economy a temporary sugar rush,  I'm talking about creative solutions that could help resolve structural problems such as the housing market which is still a disaster. Housing affordability in the US is at an all time high and so I think attempts to stabilize and revitalize it can be successful. So far the attempts to stabilize have been a failure but that probably because the wrong approach has been taken.

But never mind what I think or you think. The market doesn't gives a rat's ass anyways. We should be able to see the signs when the market starts sensing that things are going to get better...right now that's not the case. Right now the market is suggesting to world leaders that they better get their asses in gear fast.

Another rough long weekend

Looks like the market is set to open with a big gap down tomorrow. A bunch of big US banks are being sued for about $200 Billion by the US government for MBS fraud including BOA....I'm sure if Buffet was taking a  bath when he heard this his bath water got hotter by 15 degrees. Economic data coming out of China is showing significant slowdown in activity and European worries are flaring up yet again resulting in the DAX getting smashed for 5% hitting a fresh new 2 years low. Not good....not good at all especially when Germany has been the strongest country in Europe. It's amazing how things have unraveled so quickly due to a flurry of bad news hitting the wires one after another.

The only positive thing  to take away from this is that things are getting so bad so quick it makes it more likely that some sort of decisive, coordinated effort that may even involve backstop from China and the US will be forthcoming to deal with PIIGS once and for all and the solution may not necessarily be a bailout but rather a combination of a bailout and a restructuring. Whatever the outcome, disaster or not, I'm getting the sense that the problems in  Europe is approaching a climax. It's becoming painfully obvious that a Lehman event is indeed going to happen unless something big is done right now. One thing though that I find very odd is how the Euro has been hanging tough despite all the market turmoil. You would figure that it would have been sinking as it usually does during broad market declines especially given the instability in Europe. What exactly does this mean? hmmm....

One piece of news that nobody talked about is that Brazil cut rates by 50 basis points late last week. I mentioned a couple months ago the ominous condition of inverted/flat yield curves in Brazil, China and India. It seems Brazil now "gets it" that there's economic weakness coming and inflation pressures will be rapidity easing in the months ahead.  They are taking decisive, proactive action instead of waiting like most Central bankers do until it's painful obvious things have turned sour.  It will be interesting to see if other emerging market countries will follow Brazil's lead. Remember that I said a while back that one of things the market needs in order to clear the way for a sustained move higher is for Emerging market central banks to stop their tightening.

This is a dangerous market right now for anyone bears or bulls alike because the headline risks for either side are huge. Bears have the advantage though because the structural factors and economic momentum is deteriorating.They say the best time to be buying is when there is turmoil like this and that is true but you never know just how deep and prolonged any turmoil can be which is why I prefer to be aggressive on the long side coming out of the turmoil with the wind at your back as opposed to trying to bottom pick at the depths of the turmoil getting ran over. As I've been stressing...give it time. There's no need to rush in fearing you will miss the bottom and if you do so what...there will still be plenty of opportunity to get in relatively early.

I want to bring to your attention 2 dates. October 10, 2008 and  July 10, 2009. On both of these dates the market was trading at about the same level (SPX 900). Both of these dates also turned out to be good times to buy longer term but there was a major difference between buying  in Oct 2008 vs July 2009. If you remember, Buffet came out with his "Buy American" article in the NY times in mid October of 2008 and said "be greedy when others are fearful". Well, if you followed his advice you would have suffered quite a bit  for the next 6 months or so as stocks went lower still...quite a bit lower too....a year later though, you would have been comfortably in the black. But how many people who followed Buffet's advice had the stomach to ride out those interim losses during those 6 months especially when the headlines were suggesting the end of the world? And for anyone who didn't capitulate during those 6 months after October 2008 most of them likely sold at break even in the summer of 2009 thankful to get their money back. I bet few likely held tight for a over a year and actually made money.

Now, take someone who bought into the dip of  July 10, 2009. Again, the market was around the same level as it was on October 2008 when Buffet said to buy, but unlike then, the trend in the preceding months was up not down. The economic fundamentals (earnings) and structural factors (credit spreads)  were improving, not deteriorating.  Although prices were the same, buying in July 2009 resulted in no teeth gnashing and sleepless nights like buying in October of 2008 would have since you wouldn't have been underwater for 6 months (and likely capitulated) before your positions showed a profit. You would have made money quickly and painlessly never being put in a situation where your get whipsawed or emotions get the best of you. That my friends is the way to play this game - with the wind at our back.  July of 2009 is an example of what I call a sweet spot opportunity - it's when you get in on a pullback/consolidation early in new uptrend. I told you already about my botched, missed opportunity in TLT  calls when I noticed such a pullback in July of this year - shame on me.

We need to patiently await the next sweet spot for the market before getting aggressive on the long side. That could take a long time to happen...possibly as long as next spring!  In the interim there will be ST trading opportunities but I'd be very careful and selective about this. The headline risk is super high for either side of the market. Based upon what I'm reading and seeing out there, I can tell a lot of people are struggling this year even most bears, who I can tell have missed most of this move down.

This game ain't supposed to be easy...always remember that. But you can make it easier for yourself and beat the crowd if you only play the premium hands. Probably the biggest mistake most people make is that they overplay the market trying to make money every day, every week. I see clowns on realmoney.com trying to predict the day to day moves. Even veterans like Kass do this. I suppose the pressure to beat your benchmark is responsible for this behavior but all it does it backfire on you.  Often times the best thing to do is jack squat for months at a time and not even look at the market at all. If we sink into the abyss you might say doing nothing means missing out on short side profits. This is true, but in my opinion going short when the market is longer term oversold, the VIX in the mid 30's, unfilled gaps overhead and ultra high headline risk is simply not a favorable reward to risk scenario. If you want to go short in a bear market smartly, you need to wait for moments like in May of 2008 when the market had a nice rally to clear longer term oversold conditions accompanied by complacent VIX hitting sub 20. If you don't get those opportunities, it's best you just sit tight in cash and be patient.