Thursday, February 28, 2013

Ben Beach Ball

Bazooka Ben was not shy about promoting his QE pump priming program.  He sees no side effects, and thinks he can exit anytime.  He has blown a gigantic beach ball bubble and it will not pop until you see a successful peasant revolt against rich man economics.  Considering how the 99% got nowhere with their protests, it will likely never happen.

There is no sustained correction until you see more equity supply.  There just aren't enough IPOs and secondaries to meet the demand for equities coming from the POMO to equities flow.  However, I don't see us making a break much higher, because of the lack of retail participation.  We may only be able to get to 1550.  To get to new all time SPX highs, you need retail to buy into the equities theme, but the economy is just not strong enough to make that happen.  No matter how strong the uptrend is, retail will not pile in unless the economy gets much stronger.  That is not going to happen.  

I expected a rally, but not one as strong as the one we saw yesterday.  I figured we'd stop at 1510 and take a pause, but we went straight for 1520.  Trying to short this market is like trying to keep a beach ball underwater.  There is so much air put in by the central banks, the thing can't stay down.  It naturally lifts higher, the free money in all corners of the globe providing the fuel.  We may dip down to 1510 but I don't see another trip down to 1485 anytime soon.  We should hit 52 week highs by next week.

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