Don't Push It

This is not a market for those that want to make fast money.  With very low volatility in all asset classes, you cannot chase moves.  You just end up paying the bid ask spread, as well as commissions, trying to catch small moves that are just not worth it.  With a dearth of opportunities, I am mostly sitting on my hands.  I see no good long term opportunities, long or short.  In the short term, that is over the next 2 weeks, I favor short stocks and long bonds.  Over the rest of the year, I favor long stocks, and neutral on bonds.

The level of conviction is low.  Sorry bears, but I just can't have much conviction on the short side.  There is no catalyst, because the market is ignoring a weakening economy and is riding the supply shrinkage rally from stock buybacks and Fed bond buying.  What had previously been effective indicators of a top, like extremely low put-call ratios and high bullish sentiment are less effective when the liquidity favors higher stock prices, not lower.

In the end, fundamentals are the driver of prices.  I can't bet heavy short just because I see low put-call ratios and lots of bulls, when I know that corporations are blindly piling all their cash into stock buybacks, regardless of price.

For those looking for a long term top, you will have to wait for a confluence of factors.  The one key factor will be corporations having to pay higher interest rates to sell their bonds.  That happens from either the Fed tightening, or the economy getting bad enough that corporate spreads widen significantly.  I actually see the second case of a weak economy as being much more likely than the first case of Fed tightening that many are expecting.

Short term, there will be a slew of data coming out, and I have no strong opinion on any of it.  Perhaps the NFP will come out weaker than expected on Thursday.  That's about it.