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My Thinking About the Market…

If the forecast below holds true (and, yes, I realize this is quite a change from recent forecasts), the next two weeks could (please note the word is "could"... not "will") wipe out all the gains

If the forecast below holds true (and, yes, I realize this is quite a change from recent forecasts), the next two weeks could (please note the word is “could”… not “will”) wipe out all the gains we have seen in the market since the beginning of January. I am dialing back my long bias and am now shifting into neutral. I will wait until we see a bit more confirmation of the forecast from actual market action before I jump more heavily onto the short side.

(Click to enlarge)

The Turner CrossOver Oscillator shows a correction could occur at any time. Prior to the expected correction, though, the market could continue to build higher. Betting heavily on the long side right now doesn’t hold the right pot-odds and the cards are not strong enough to put too much on the line. I am getting smaller; meaning I would take cash over holding long positions.

As for my long-term “Core” long holdings… I am staying in, but aggressively selling premium.

As for my long-term “Core” short positions… I am not quite ready to start adding to these holdings, but I may well be there before the week is out. At this writing, Greece has, for the umpteenth time clawed its way back from certain death. Riots and arson, spurred by the loss of a free ride and/or anarchists, have the country in a desperate state. This is like watching a train wreck in slow motion. With the life support turned back on by the Greek Parliament, our markets look to open a bit higher in the morning (at this writing)… which causes me to ask this question… “If our economy is so strong and our banks have no material exposure to Greek debt, why did we see the market sell off on Friday when it looked like the Greek debt deal might not get approved by its Parliament… and now, with the deal done, our market turns around?” Maybe a better question: “Is Greece propping up the US market?” If that is the case, what does that say about the strength of this current bull market run since mid-December?

Of course, Greece is NOT propping up our market, but one has to wonder… Off-the-wall-inquiring-minds might ponder such obtuse musings…

My point… I’m sure you want me to get to it… Greece does NOT matter in the global scheme of economic stability… it’s what Greece represents; which is the potential failure of a non-third-world country where the pattern of providing unlimited financial support via social ‘safety-nets’, might actually fail. And, there are a lot of much bigger countries with the same socialist framework. If one fails, could others be that far behind? This concept of the potential of a failed geo-political structure that has become pervasive throughout Europe and is being promoted all too much in this country, is the real fear that exists. And, it is fear (or lack thereof) that drives stock markets. The talking heads may try to put other, more socially correct spins on what is going on in Greece, but when you strip away all the facade of political correctness, the unadulterated truth is socialism is failing and Europe will do whatever it can to hide the fact that socialism is the root cause of its financial meltdown. Our country would do well to watch what is going on across the pond and do everything it can to stop the trend toward socialism that started in this country several decades ago. Otherwise, we are doomed to follow our European brethren off a financial cliff, as well.

No… Greece is not propping up the US stock market, but it does represent the potential pandemic of collapse of governments that believe more in equal outcome than in equal opportunity.

As always, you have every right to completely disagree with my cause-and-effect conclusions.  That is what makes a good trade.  Both sides of the trade believe they are the genius and the other side is the fool.  And, I KNOW you are not a fool… so that leaves me in a precarious position.

I’ve long said we are under-utilizing nuclear energy. This shouldn’t be controversial; nuclear has something for everyone.