Leaning Long

It is going to be difficult to get any kind of panic in this market just yet.  The uptrend in the equity indices is too strong for any panic to occur just yet.  It takes time to form a top, and the best strategy until this market changes behavior is to buy the dips.  The market has had ample time to selloff more, but it refuses.  There seems to be an army of dip buyers waiting to pounce on any weakness.  That is why I have given up on the short side for the time being, waiting for the bulls to get more positive.

I got out of my bond position on the strength yesterday, expecting 2.20% 10 year yields to be a resistance area that bonds will have a hard time busting through.  I can definitely see a reversal in yields back towards 2.60% if the French elections go as consensus expects.   The French elections are the wildcard, but it seems like regardless of who he gets elected, France is going to have a difficult time getting out of the euro.

The equity put/call ratios have been elevated the past few days, VIX has been moving higher, despite the low realized volatility.  There may be one last down move, perhaps down to SPX 2320, which would be a buying opportunity.  I don't see 2300 in the near future unless Le Pen wins French election round 1 by a big margin.  Over the next few weeks, expecting a grind higher from these levels into May.  2015 seems like the best template for this market, choppy at the top, but grinding higher until you get that big crack lower.

I am leaning bullish, and have nibbled a bit on the long side.  Will add more long if we get that move down to 2320.