Market Mayhem

I've been trying to avoid tossing my hat into the ring on this market. Everywhere I look, someone is talking about how this market is about to rollover and fall apart. I've heard about the rally off the March low being 32 days old so at 34 or 36 days, we're going to see the market stall out because....those are Fibonacci numbers! And 36 days beware because 36 is a natural square (6x6).

I don't even know what to say to that. There could be a lot of good reasons for the market to stall out, but the number of days since the rally started being a natural square root or because it's a fibonacci number? Even a broken clock is right 2x a day, but that doesn't make for a trading plan does it? Not to offend any Elliot Wave folks (not that they can even agree among themselves), but it is this kind of crap that makes people think Technical Analysis is witchcraft, not that I care.

In any case, the market is showing some extreme bullish behavior here. There are quite a few indicators that suggest a reversal could be at hand, not the least of which the famed VIX. However, I may submit for your perusal, there is no such thing as an oversold level. The market can and will do whatever it wants. To the dismay of any who may follow stochastic for trade signals, you know they can hang around in the stratosphere for a real long time. The market is a pendulum, it over reacts way far to one side and then way far to the other.

On a more objective note, obviously huge inflows of money were at play today as the S&P has seen its way right through the 1400 level that everyone on TV and the web has been so worked up about. As a casual observer (specifically trying not to analyze this too much), there are a lot of great looking charts right now that suggest to me that a reversal, should it come, would be and would have to be, a really ugly event. There are a lot of bases that have built up, a lot of positions that have accumulated in a lot of stocks. I'm really surprised at the extent of or the quality of, this bear market rally. Not to kid ourselves, that is what this is, at least until proven otherwise.

DEVIL'S ADVOCATE-A role I'm quite fond of, especially when we are in a bull-run (I'm a bit of a bear myself being more at home in a short than a long). I'll repeat, because it is worth repeating and because if this thing goes much further north, quite a few people will be more than happy to forget this little "inconvenient truth"-THIS IS STILL A BEAR MARKET RALLY!

Personally I'd be hard-pressed to enter too many more (if any more) long positions. I'm pretty well loaded down with longs and calls so I'm looking for my shorts as we speak-and not finding much more than some fade-day trades. The dollar sure does look like it wants to rally the last day or two. So maybe the bubble in commods/metals/energy may get a little more pressure? If equities continue to outperform commods (continue =very recently obviously), then maybe we'll see the "safe-haven" crowd moving into equities full bore. That'll probably be the point we'll want to go short equities and long commods again-at least until they pop for real.

So here's how I'm sitting, LONG every thing (except for a very poorly placed short trade on SPSX that I'll be paying for in the am): DHI May $17.50 calls, ALTR May $22.50 calls, (they already doubled for me), AATI, CAR, GSX, MGM, MOT, MLHR, OSTK, SCVL, SUPG and WLK.

So, good luck-no opinions here. Seriously, don't read too much into this post, it's really late.