Nervous Bulls

The bulls are a mile wide and an inch thick.  There has been a notable change in tone in investor attitudes from the honeymoon period, post-election, to what you have now, nervousness about what Trump will do next.  The worries pertain to his ability to execute on those massive tax cuts and infrastructure spending that he has been promising.  Sure, he will try, but will Congress oblige?  As Trump's popularity seems to be getting even lower, there are now doubts as to how willing Republicans will be to bow down to his every command.

You got a big spike up in the put-call ratio on Monday, and a fairly elevated ratio yesterday, speaking to the nervousness in the market about Trump's immigration policies, and his poor execution.  No, the market doesn't care about immigration.  They care about the public response, which has been mostly negative, and its effect on his economic policy, and his ability to get those massive tax cuts through Congress.  90% of the Trump rally is on those hopes.  The other 10% is infrastructure/deregulation.

If Trump gets much less than what he wants on tax cuts, then there will be the dickens to pay, as Livermore would say.  That is what is keeping this market on its toes.

We keep getting these intraday selloffs with a rally at the close.  The market keeps testing support, and it keeps holding.  Again, this is a bit like lower volatility version of 2015.  I don't see a big pullback till we get to the spring.  There is still too much of a potential bull catalyst when the tax bill hits the headlines.  I do believe Trump will jam it through.  Congress has never met a tax cut it didn't like.

What the past couple of days has taught us is that you absolutely cannot short in the hole.  If you are going to short, you better short after a rally, and wait for the market to fall.  Shorts who are chasing are getting punished in this low volatility market.  Will wait for extremes to short now, the gloves are off.  The rallies do not last long and it is getting safer to short strength.

The Fed meeting is today, and I expect no change in their language.  They are cowards.  Don't expect them to do anything to upset the applecart.