So, what's another day holding and hoping when you are among witless sheep just itching to be sheared?
Oddly enough (and I use the phrase facetiously), comparing the present moment with last December there appears to be a relatively greater measure of complacency dominating the long side of the trade.
How do I know this? I'll show you in a second. First, though, a comment on what this might mean...
Yesterday, I suggested "a relatively buoyant period might carry [the market] into autumn." Truth is, however, much depends on there being no pressing, urgent need to raise capital.
And you know what? At 6' 2" and 200 pounds, I might have better odds at being the winning jockey at the Kentucky Derby next year.
There's much banter about "the worst of the credit crisis" — the extreme systemic risk of last fall — being behind us. Yet Ben Bernanke's report to Congress this week ... citing the fact that, credit market behavior remains dysfunctional ... gets very little attention.
Moreover, credit markets last December were likewise incapable of meeting their end of the bargain in the "Inflate or Die" status quo built up via structured finance over the past couple decades or so. At least in December, though, some larger number of long positions were being sold into strength. Today, however, there are relatively fewer being put up for sale...
Maybe in the volume comparison, now versus last December, I am splitting hairs. Yet at the expense of being repetitive, the market climbs a wall of worry that is reflected by increasing numbers of shares offered up for sale.
Here we are, seven months later ... the S&P 500 trades not much higher than in December ... credit markets remain dysfunctional ... and long equity positions are being held more tightly than ever ... when instead, if there were any fear (which one would think is extraordinarily justified here), increasing numbers of shares would be offered up for sale ... particularly considering how far the market has run since March bottom.
There's nothing doing! And this, I submit, is an objective demonstration of complacency.
This condition is all the more disturbing given that, technically, under the covers, bearish divergences (everywhere above!) plainly advise caution. Indeed, rather than supporting yesterday's view that, a period of relative buoyancy might persist over coming weeks, a spectacular, out-of-the-blue, garden variety collapse could be equally as likely.
When? Oh, just about any minute now...
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