Exasperation

I am sure I am not the only one who is surprised by the rocket ship that the SPX has been this week.  I expected a bounce after Friday's massacre, but only to last week's highs, not to all time highs.  I am seeing some similarities between 2014-2015 and the current period starting from last summer.  I remember there was quite a bit of optimism in early December 2014 after the V bottom off the Ebola/growth scare in October, and plunging crude oil prices.   It ended up being near the top of the SPX (price wise, not time wise), and you had a lot of chop and flattish trading from December 2014 to August 2015 before the massive waterfall crash.  I could see a similar situation here, just like late 2014, with bond yields are stubbornly staying low and trending lower despite a relentlessly rising SPX. 

I see very little upside in the markets now with Presidential election uncertainty looming over the market and with an overvalued and overbought market.  I see plentiful opportunities on the short side this year as any new all time highs this year will be met with lots of selling due to the potential news bombs later in the year, with Bernie Sanders being the biggest one.  Right now, most are assuming that Trump will beat Sanders but most polls about a potential match up between the two have Bernie leading by about 5%.

It looks like Biden is slipping lower and lower, as his rallying cry about electability and having the best shot at beating Trump goes counter to the lack of enthusiasm most independents and Democrats have about the candidate himself. 

The best case scenario for the market was a Biden vs Trump election in November, because both candidates are Wall Street friendly and unlikely to try to raise taxes.  A Sanders vs Trump election is a heads/tails situation, Sanders you lose money, Trump you make money outcome.  A Bernie Sanders win by itself isn't so bad, as long as the Republicans maintain 51 seats in the Senate.  But Presidential election history shows that Congressional races usually have similar results to the Presidential race.  So a Sanders win would probably mean Democrats have gained seats in the Senate, giving them a possible 50+ seats which is enough with the VP tie breaker vote to pass the socialist legislation that Sanders wants. 

But right now, it is clear that the markets are not focused yet on the election, since it is so far away and because most believe that Trump would beat Sanders and would only really be challenged by Biden, who himself would be market friendly.  So complacency all round on Wall Street these days but that usually doesn't last for long with these kinds of overvaluation and parabolic charts. 

Lastly, on the stock of the year, TSLA, it is a great trading stock, with wild moves in both directions now that it hit a blowoff top this week.  It will probably consolidate its gains for the next few weeks but I expect another surge higher making it go past 1000 with ease.  I would rather be a buyer of dips on TSLA than shorting any rallies.  It is still in the parabolic up phase in my opinion.  There isn't enough supply of big market cap momentum growth stocks like TSLA to satiate the demand coming from both institutions and retail.  This isn't like previous bubbles like TLRY or BYND, TSLA has a better story and more of an institutional and cult following.  The bubble will probably last a few more months.