Market Update: Extreme Overbullishness Again; Return of the "Good News is Good - Bad News is Good" Mentality

First of all; let's see the news which, yet again supposedly drove the market higher on Friday. Here are the notifications I've got from Bloomberg on my iPhone:

• US Payrolls rise less than projected
• Intel Lowers Q3 Revenue Forecast

Yet, the market rallied; and not only did it do so, but the last 15 minutes saw the market close at the highest level of the day, meaning that in spite of the current environment, speculators are happy to pile on risk just before the week-end break. Undoubtedly because they believe Monday will be another great day, and they expect governments to come and help them out with more inept policies. 

As far the the VIX is concerned, it collapsed this week to 14, close to the lowest levels since 2007. Undoubtedly; complacency and confidence are at extremely high levels.

At the same time, IWM; the ETF on the Russell 2000 - which I like to call the Equity Junk Index - rose back 84, higher than the top reached in 2007 and close to the all time high made in April 2011, just before one of the biggest 20% drop ever.

Bubble currencies and commodities popped:Silver, Gold, CAD, AUD and my friend SS sent me a chart of the DSI for Silver, which is now comfortably sitting at 88, meaning extreme optimism even though price-wise, we are still 40% below the top reached about two years ago now.

In the meantime, reports about $200 oil have been resurfacing and the final confirmation currently missing is for Sprott and his accomplice in foolishness Embry come on the TV to talk us about Silver $1,500.

In the meantime, real economic news coming from anywhere is very poor. With that level of complacency, I wouldn't be surprised if we saw another repricing of risk very shortly. Why not Tuesday after the iPhone 5 has been announced? Apple driving some much of the market, it's highly likely that the sell the news behaviour will mean a peak for AAPL and for the equity markets...