If the market does manage to rally into late April I believe it would be an exquisite shorting opportunity. And I am not talking about the type of opportunity where I short in the morning and cover in the afternoon. I believe the top for 2010 would be in. These are the reasons:
- The government will start selling Citigroup shares in late April.
- Positive seasonality becomes negative seasonality.
- If we rallied into late April, could you imagine how stretched sentiment would be on both a short and intermediate term basis?
- Quantitative easing ends this month.
- Another wave of mortgage resets is starting.
- In the latter half of the year stimulus becomes a net negative year over year.
- Comps become tougher.
- Municipal and sovereign imbalances are getting worse.