Tired Trend

"Jesus, you can't make a buck in this market. Country's going to hell faster than when that sonofabitch Roosevelt was in charge. Too much cheap money sloshin' around the world. Worst mistake we made was letting Nixon take us off the gold standard."
--Lou Mannheim (Wall Street)

After a couple of sideways days, major indexes were on the move once again. At one point, both the S&P 500 (SPX) and NASDAQ Comp were within spitting distance of 'round number' milestones (1000 and 2000 respectively).

They 'feel' good to me right here but that means little as I don't proclaim to make my living by trading the guts of the tape. Many of the traders I do follow are getting pretty bearish in here.

A couple of historical analogs helped further restrain my bullish pangs today. First, the SPX is one trading day away from realizing it's largest percentage gain since July 1939. However, look what happened in the period that followed.

Second, the SPX has rallied about 46% in 145 days from the March lows. This move is on par with the bear market rally that followed the Crash of 1929, which rallied a similar 46% in 147 days. Once this rally was over, however, the index cratered for an 85% loss.

The lesson, or reminder, is that the sharpest rallies tend to occur in the context of bear markets. And this rally is likely getting long in the tooth.

I've been adding to my risk profile over the last couple of weeks. Vehicles include retail (GPS), energy (DBE, GAZ), and select pharma (LLY, MRK). I'll begin shedding this incremental exposure) into further liftage.

positions in DBE, GAZ, GPS, LLY, MRK