Bears are giving up

The fact that markets have been rising for no reason but irrational exuberance and the belief that the V-shaped recovery is going to bring back jobs and profits to record levels (despite hard data suggesting exactly the opposite) shouldn't surprise anyone who has studied behavioral finance or Elliott Wave theory.

Despite calling a false top a couple of months ago, and getting hurt on my shorts, I still believe Mr. Market is just giving us a formidable opportunity to sell it at highly overvalued price all the securities we want. The pain is less that many bears because I have some longs and hold a lot of precious metals.

This doesn't prevent me from getting annoyed by this straight move up but recently, a couple of the most confident shorters that I've been following seem to be losing patience (who wouldn't!) and getting more annoyed than ever:

Mike, the Sovereign Speculator has not been posting much for the past couple of months...

And Tim Knight, from Slope of Hope is expressing his feelings:

I'm in low spirits right now. I work very hard on my analysis. There are times that this analysis leads to a bonanza, and there are times - like now - where I feel like throwing darts would be more effective. It is profoundly unrewarding to spend countless hours analyzing, preparing, and trading with nothing to show for it.

Today, many assets tagged new highs (either lifetime or for the past year+) - - such as the Dow 30, the S&P, and gold.

Recently, it seems like any time a flicker of hope appears, the bulls just ramp things right back up again. The only silver lining in this entire scene is that the Russell, which is really my mainstay right now, isn't making new highs. And that's cold comfort indeed
I really twisted myself into an emotional knot yesterday. I kept asking myself: "What's wrong with you? Why are you being so feeble?"

The stone-cold fact of the matter is this: I look at a lot of charts, and maybe I'm just too blinkered to see them, but I have found virtually no compelling bullish setups, whereas the bearish setups seem like manna from heaven. In my experience, the kinds of items I am short are just the kind that tumble swiftly with any market weakness.

The problem is that for the past eight days, there hasn't been any lasting weakness.

But I am not "running scared." At the moment, I have 43.79% of my cash buying power deployed into positions, 100% of them short, with one position - XLU - being, the largest non-leveraged position I've ever had in my life.

Obviously I would hope to look back on this era at market history and pat myself on the back for being stalwart. Of course, I could also look back at this time as simply being right in the middle of an inexorable grind to 50,000 on the Dow. (Kidding, kidding........)

As I'm typing this, two hours before the opening bell, it at least seems that the /ES and EUR are pointing in a good direction. But what I certainly know from recent experience is that these - - errr - - "red shoots" can vanish swiftly.
My comment is: don't give up guys. The simple fact that you are so frustrated is quite telling on how the market is overstretched and how things can roll over sharply. I won't make any forecast though, as any forecast made by anyone has been proven wrong since June...

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