I know it's been a while since my last post. I would have liked to have posted sooner but I've been busy. Since my last post the market dipped as I had expected but it was a relatively minor dip and it wasn't too long before the market had a major rally and hit fresh all time highs, the main reasons of which appear to be the notion that the Fed has hinted that it will be on hold for some time, trade "progress" is being made with China and jobs data suggesting that the US economy is not heading into a recession as many have been fearing all year long. So, does this mean that investors in general are finally embracing the market showing unbridled optimism? Hell no. All I see so far is pessimism unwinding and rather reluctantly so. We are still seeing no meaningful fund inflows. Aside from Trump, very few people in the media have been celebrating/embracing this upside breakout to new highs. And I have not seen one market bear, not fucking one of these miserable, self righteous clowns come out and say "you know what, I was wrong and I've been wrong for so long that it's so embarrassing". I'm talking about clowns like Gundlach, Schiff, zerohedge and the rest of them. I find it hysterical that these jokers are still given all the attention they get over the years despite being so comically wrong over and over and over....and it does not matter if the market were to make a major top today, these guys can't come out and say that they were right but early. No fucking way, not when you've been bearish from DAY 1 of this bull market. I wonder how my millions have been lost or foregone by their followers. Do yourself a favor and NEVER listen to any of these clowns again if you have been. This is not to say never be bearish, but just don't follow these jokers. They will poison your mind. It's funny how I see some sarcastic tweets that say things like "thanks for QE and easy money the market is at new highs". My response to that would be this....if you knew QE and easy money would bring the market to new highs WHY THE FUCK DID YOU NOT TAKE ADVANTAGE OF IT and then thank the Fed? Instead, you moan and complained about it! That's the same as spotting $100 on the street and not picking it up and then complaining the next day that you don't have $100! The excuses from the pessimists are pathetic. They are so wrapped up in their loser dogma and negativity.
The message I've been preaching here for years is that until we see evidence which strong suggests investors in general have FULLY embraced the bull market, the bull market will continue. Until we reach that point, there will be corrections, there will be scary moments but the benefit of the doubt has to go to the bulls I realize this can be very difficult to believe in at times, I myself have had serious doubts at times. It's easy to doubt yourself especially during down days and negative headlines but this has been the correct way to approach the market. And if you're watching the market day by day, tick by tick it makes it even harder to follow this approach. It's also very difficult to correctly time every ST wiggle in the market. Now having said that, you know I can't resist making a ST call on the market at times so allow me to indulge. The market would appear due for a least a bit of a consolidation here but I gotta tell you, everyone seems to making this call which to me means that any pullback won't be that deep at this time. Whenever you see ST trader types show complacency such as buying a lot of calls relative to puts, at the first hint of weakness you see them rapidly embrace the bear side again piling into puts. This is happening now as the market has been rolling over a bit here.
The only time we saw people in general show any love for the market for a sustained period of time was q4 of 2017 until Feb 2018 which was evident by heavy inflows to equity funds and anecdotal commentary from the financial media with their "global synchronized growth" mantra. At that time I was warning about this. By the time we reached the end of 2018, that optimism was wiped out completely and was replaced with pessimism. At best, we are at the point of neutrality now. We will see a return to optimism once it crystal clear that the global economy is on the rise, political uncertainty is low and all is well again, but at that point the market would probably be 15-20% higher. I said here before that you have to skate to where the puck is going to be not where it is now. If you wait for everything to be hunky dory you will miss out most of the gains or even worse get in near the point where things start to head for the worse.
Let's talk about early 2018 for a second. At the time I was debating with myself whether the optimism that was evident was a sign that the bull market peak was immanent. I concluded that the market would probably have a severe correction but that the bull market could still be in tact because we didn't really see optimism turn to euphoria. You could argue that the bubble in bitcoin and cannabis stocks were symptoms of euphoria but they ware isolated pockets of the market since they didn't garner large scale institutional ownership. When you look at what caused the last few recessions it was the result of a major sector in the economy going bust which created a crisis that spilled over to the broad economy, that can only happen if there is large scale exposure i.e. institutional ownership of the sector in crisis. We saw that happen with MBS in 2008 and the technology sector in 2000. Bitcoin and weed stocks were largely avoided by institutional investors/firms and so that's why I had hope that there would not be a major economic fallout when their bubbles burst. There is this notion that the next crisis could be from the corporate bond market of which there is a lot of low credit credit quality bonds that have been issued in recent years. Maybe that could be it, but I would suspect that until interest rates have a very notable rise, there's no need to worry about that for now.
The bottom line is that bull markets climb a wall of worry. So long as there are enough people worried out there it keeps expectations low and guards up which makes downturns in the market likely to be just temporary corrections. It's impossible to always know the timing of the corrections, how deep they will go and how long they last. The market is simply too random in the ST. However, you still need to pick your spots. It's not wise to chase a market that has gone up in a straight line because after all, there is always going to be uncertainty. This is why I often use the words "likely" or "probably" because you can't know for sure what the market is going to do but the longer the time frame, the less "noise" plays a factor and so you should be making most of your bets on longer term time frames with strong conviction. It's also OK to not have any positions when there's no decent setups/entry points or when your conviction level is not strong either way. The market will always be there when you wake up the next morning.
