Complacency Reigns Supreme

My largest gripe with this market is not so much that everyone is so bullish, but that nobody is scared. Very few feel that there is much danger in the stock market at the current juncture. That really bothers me as the market is inherently risky and normally this prevailing view would cause me to hold a very large short position. However, we are heading into one of those seasonally strong holiday periods where it rarely pays to be short. I am going to stick with my small short position for now.

6 comments:

PJ said...

David Rosenberg says today he thinks the big banks are "pig farming" -- trading shares back and forth amongst themselves to keep prices rising steadily and sucker in piggish investors to whom they can sell stocks bought at lower prices.

Possibly we're heading toward a 1987 kind of scenario where bond yields have to keep rising until they force the equity market to turn over, after which we have a rapid 20% drop in equities and 20% climb in bond prices.

Onlooker said...

I feel that way too, and I'm inherently bearish longer term. But as I've pointed out, the strength of the market internals portend more upside before a significant fall.

But this sentiment extreme is just crying out for a sharp correction before we can go up from here. Maybe it's just a day or two of a shakeout. Maybe revisit 1140 or at most 1125 in a swift fashion.

I hope that's what happens and it throws a scare into the herd. I'll be looking to buy the dip, but with a wary eye.

Anonymous said...

people are scared of missing the boat!

Anonymous said...

Sold CnLG @ 1.70

OD

Random Thoughts said...

@OD

What you doing with JTX?

Anonymous said...

nothing it didn't hit my target buy of 1.75 today