Tear Drops

Watch me clinging to the beat
I had to fight to make it mine
That religion you could sink in neat
Just move your feet and you'll feel fine
--Culture Club

Over the past few days I've had pangs that this market wants to head substantially higher. Yes, many sentiment indicators and oscillators are streched toward extreme optimism, and valuations and structural issues suggest that there is unfinished business on the downside, but my growing feeling is that risk appetites are coming back as prices head go up--sorta like 'the coast is clear' feeling.

Moreover, after getting pounded in the approval ratings following their health care jam session, you have to think that this administration and majority Dems in Congress are going to do everything in their power to make the electorate 'forget' come November. What better way to shorten memories than to send folks another gift in the form of a liquid tide for the economy and markets. I mean, what do they have to lose after pushing things this far?

Call it the government bubble or whatever, but in my view the chances of significant upside are increasing over the next few months.

As such, I'm gradually putting on some upside risk, primarily in terms of commodity-related ETFs and stocks. Am also swapping more cash for physical bullion.

I have little doubt that this thing will end in tears that will make the previous decline look tiny. But perhaps Ms Market needs to suck more folks in before the crying game begins.

positions in commodities, gold, SPX