Welcome to the What the @*%& Rally!
I would like to officially welcome you to the second annual "What the @*%& Rally." Participation in this event is required and the great thing about this event is that absolutely no economic factors are relevant. Some of you seem skeptical and appear not to believe me. Let's take a closer look.....
Housing Starts fell for a third straight month. Let me get this straight, are you telling me that we are in the midst of a robust economic recovery and we have been selling fewer homes for three consecutive months. Single family homes sales are down and homes for sales (inventories) are up, and not just up, but up dramatically, their largest month over month jump in 22 years. These are the signs of a recovery? Eh what the hell, it doesnt matter because we can just ignore these facts and move higher because this is the "What the @*%& Rally!"
Washington DC led by President Obama and the Democrats passed landmark legislation that will reform the healthcare landscape this week. What this program entails will be a higher tax rate for those who are currently propping up our economy and an addition 940 billion dollars in costs which will add to an already increasing 12 trillion dollar defecit. I haven't even gone into the implications it creates relating to breaking constitutional law by mandating the purchasing of any form of insurance. It's another program that the United States cannot afford and it's largely unpopular with the American public, not to mention how it will cripple major insurance providers. But what's the difference, this is all unimportant because we are in the midst of the greatest "What the @*%& Rally" in the history of the stock market. Just pretend like that horrible legislation isn't there and let's move forward.
Greece's debts problems could cause a Jenga-like collapse of the world financial system. Numerous superpowers hold Greecian soverign debts and it is seemingly more and more likely that come the maturity date Greece will have a hard time meeting those obligations thus creating a worldwide domino effect. Germany, Spain and France are particularly vulnerable and investment in any foreign banks is simply suspect at best right now until this problem passes. Nothing has been set into stone yet regarding how Greece is going to solve its debt problems, but psssshhhhh, it's all fun and games because the most awesome "What the @*%& Rally" since your parents were born has kicked into high gear. Foreign debts don't matter....this rally can continue while countries around us teeter on bankruptcy.
Garbage stocks continue to be the daily leaders moving us higher. The biotechnology index which is ripe with dozens of companies lacking tangible products and burning money at nearly as impressive a rate as healthcare reform is topping new highs. Companies like Maguire Properties can report FIVE times its market value in yearly losses and move higher. Media and advertising companies can carry debts greater than their market capitalization with year after year declines in their revenues and motor higher. But you know what? Who cares, we're in the middle of the "What the @*%& Rally" and none of this imporant. Fundamentals - factual evidence of a business' success...totally unimportant as long as the rally continues.
Brutally overbought conditions in nearly all sectors of the market. Not since man developed his obsession with B2b possibilities in 2001 have stock market indexes been so incredibly overbought from a technical perspective. Standard deviation models, bollinger bands, relative strength indexes, stochastics, summation indexes all agree that more than just a breather is needed at these levels. But what does a bunch of hooey-fooey technicals have to do with the "What the @*%& Rally," I mean only 20 million people follow that stuff, clearly they have no clue what they're doing. The Rally must continue!
Jobless claims are up two months in a row while consumer confidence is down. Suddenly more people are filing for unemployment claims, a direct reversal of a trend we've seen over the past six months and consumer confidence took a much larger than expected tumble with most Americans still mildly pessimistic about the country's economic future. But what are government facts other than just another thing to ignore as the "What the @*%& Rally" kicks into a super high gear.
Government stimulus is winding down and government investments have been brutally bad. The stimulus package which has boosted spending and driven growth in infrastructure companies over the past 18 months is beginning to run dry while Fannie Mae and Freddie Mac continue to bleed investors dry. The government could indeed be out something on the order of 200-300 billion dollars when all is said and done. What's the big deal though, because we're going to rally higher whether we lose money or not because we're on the "What the @*%& Rally" ride, the best one in the whole amusement park!
If you haven't figured out by my inherent sarcasm, the "What the @*%& Rally" is a big heaping pile of crap! How much longer can the market continue to ignore some absolutely horrid financial stories and facts for the gain of garbage companies? Do you really expect me to believe Maguire is worth what it is now or that biotechs will continue to march higher after seeing 3 of them fail to pass a drug by the FDA in the past 2 weeks? Do I really think the indexes are going higher - hell no! Do I think I can accurately call a top - no...but I can get as close as possible to a top and take advantage of the inevitable sell-off. Summer must be close by because I believe it's time to get those shorts out and bet against this, what I shall now call the "Jenga Rally"....because it's all going to come crashing down eventually. The market can't ignore factual evidence forever.