TOUGH TO BE A DISSENTER
I caught Meredith Whitney on CNBC this morning and after listening to her defend herself against the scrubs on the panel, I wondered why she bothered to even go on. It is true that some of her dire predictions last year were incorrect and you have to be prepared to face the music if you go out publicly on something and you are wrong. She did not really admit to being wrong previously, which in my view was a mistake. Sometimes you are just wrong, it is what it is. Own up to it and move on, don't give some half assed excuse as to why you were not really wrong, it takes away from your credibility. I am sure her research is sound and she will be proven right in the end here. It is hard for anyone who has been around for awhile to have imagined the FED could ever control things this tightly for this long. It is unprecedented and many long time market observers have underestimated them.
I do find it interesting that someone that is very bearish, would take such a lambasting. You have to be a complete idiot to buy this recovery story. It is the biggest load of crap that has ever been propagated. She is a banking expert, and we all know the banking system is in dire straits. Having a party that is essentially bankrupt, loaning money they don't have to other bankrupt parties, is hardly a long term solution for the financial crisis that we have "still going on." Yes I said it, STILL GOING ON. This is not over by any means. However, we are supposed to believe that just because the FED has manipulated the stock market into a huge bull market, that everything is fine. This is just hogwash, PERIOD. Maybe this plan will eventually work but imagine the world exactly as it is now in every way with one difference, DOW 6500. Would we still be talking about a recovery if every one's 401k balances were still in jeopardy? If the answer is no, then there is no recovery. If it is yes, than we do have one. You have to answer that for yourself.
Why do you have to get beat up like that for having an opinion. Maybe she is wrong and if she is her clients will lose money. What is the harm in that? I doubt many people agreed with Paulson when he got short a few years ago based on his belief the real estate market would implode and billions of dollars later he was proven right. The trick is timing your positioning, and that is easier said than done. If you are fighting this rally, you better have awfully deep pockets. I do not feel that it is wise as a longer term investor to be shorting this yet, the momentum is way too strong. I do think your stops should be tight now in case something happens.
Speaking of something that is probably wrong but I am still going to throw it out there, check out the possible sell signal in the SP 500 above. This is one of these trap patterns I like. If tomorrow we were to take out today's low assuming we close strong today, it will have trapped breakout players into a bad spot and could create a decent down move. Of course we have to preface this with the fact that the FED is trying to limit any downside moves even on an hourly basis, so it is doubtful this could get away from them. However, it is a legit trade and one I will take a swing at if it develops. I do have some filters at the point of impact that could derail this entry if we get there and those will not be divulged here. As a result it is not a lead pipe cinch that I will short tomorrows low if we get there, but it is probable. I just won't know for sure until we get there if the trade is a go. We may just sail higher, but we are really getting alot of divergence now. We also have potentially sells in the metals now, and some other commodities, the grains in particular, that also have this potential trap pattern in them.
We know that basically all the markets are still one trade with a few outliers, so be aware of that in what you decide to play. A sell in one market is the same as a sell in stocks etc.. I do think we have the potential as I mentioned the other day for this "arrangement" to separate some, but it has not happened yet. Until it does it is business as usual and most trades are the same. I did have some stock longs I just took off today due to this pattern, and the big divergence that is here now. We can and might still keep climbing, but the air is getting thinner up here for the sane world. I can tell you this, if you pattern your trading around buying at levels like this, eventually you will be carried out. This type of market action is unusual, and once we return to a more balanced situation, you will find yourself in trouble if you just blindly buy breakouts. I like to buy breakouts, but not at levels like this. There are divergences all over the place here, the warning light is flashing.