Groundhog Day

Waking up in California these days is a bit like a scene out of Groundhog Day for me. Since about three months ago I stopped bothering to fall out of bed at 6:00am and 8:00am PDT is usually when I wake up.

By that time the session is already ninety minutes in the works and if there was a drop (rare) it is usually a good time to jump into the scheduled ramp up. If there was a ramp up already (80% of the time) – well, you probably didn’t catch it at the open anyway and most likely it’ll be ramp & camp for the remainder of the session and we get to fight for the scalp scrap via Geronimo.

Now, the fun & games have now pushed us to yet higher extremes. Please feast your eyes on this chart – which just a year ago would have been laughed off like pure science fiction (not unlike the thought of ever seeing a publicly funded U.S. space program in our lifetime again – the money now flows to banksters instead):

If you look carefully you can see Bernanke’s middle finger on this chart – and it’s pointed at anyone who dared to go short this historic melt up. It’s been slightly over a year since we painted 1,275 on the COMPQ and we are now approaching its 78.6% fib retracement line. If you think that it will pose any sort of resistance – think again. Just look at what happened with any of the others that were sliced through like a hot knife through butter.

I have been quite prolific in stating that a medium term retracement should be expected shortly. But it’s been over a week now since the famed 276 ISEE equities reading and I don’t see any weakness at all. Divergences are stacking up but the tape is now not only blatantly ignoring horrid fundamentals but a truck load of technical conditions exemplifying the concept of overbought as well. The best I can offer at this very point is to either simply stay out or to trade very small and cautiously. The symbols I have been posting have been holding up quite well and I’m pretty happy with my portfolio – which however I keep strictly delta neutral.

It’s not that I’m frustrated – I’m way beyond that and am determined to trade whatever the market throws at me. The problem is that I don’t understand this market and that everything that’s happening in the past six months or so flies in the face of anything I have learned in my career as a trader – and that it scares me (and pretty much everyone I talk to who’s not an idiot these days). This tape puts Greenspan’s famous ‘irrational exuberance’ to shame – the dot com bubble was a joke compared with this!

The incredible melting market show continues – thirteen months and counting – stay tuned.

Cheers,

Mole