This market is about to get resoundingly silly in nature. It is enough to want to make a grown man want to exercise leverage into a high-probability trade that is screaming "come get me" in a financially sensual French accent. Unfortunately, I am bound by the incontrovertible laws of expected value (EV). As outlined earlier today, I make my living by being on the right side of EV not some of the time, but all of the time. Put simply, statistically sound decision making. While the trade itself is of a high probability, my decision to take on such an arrangement for the portfolios I manage is not cohesive with the various moving parts that make up the process. And it is the process I am concerned with more than anything.
My mental makeup doesn't mean that your hand has to be swatted away from whatever device you are using to infiltrate the markets, however.
Here is what I am seeing:
- The consolidation that I expected for the Nasdaq 100 after breaking the key trajectory has not even come close to touching the trajectory in an effort to retest. Instead, it has simply moved into a tight sideways range ABOVE the trajectory as it prepares for the next leg up. Astoundingly bullish behavior.
- What this pugnacious demonstration of bullish bravado is screaming into my open ears is that the combination of a bullish Q1-Q3, middle of Q4 seasonality, brilliant technical picture and very little in the way of potential fundamental headwinds for the rest of 2013 is simply too powerful a bullish concoction for the markets to ignore. They don't even want to give a little bit back, allowing those misfits who were not reading this website on October 10th the opportunity to make up for the grave error of not having sufficient equity exposure.
What is dastardly about the current bull trend is the fact that it is being led by the Ben-Gay index of equity securities. Namely: Utilities, basic materials, consumer staples. The stuff that old men with statements held in trembling hands have great pride in holding for a majority of their lifetimes. In other words, the stuff that I have no exposure to whatsoever.
But never mind that, I have already come to terms that to every ebb there is flow. My time will come shortly. In the meantime, I will manage the in between.
