Zip-a-Dee-Doo-Dah

A low-volume Friday and the pumpers are having a good day with the NDX up over 50 points. Full risk on because, of course, everything is fixed. Yes, Europe may have a few problems but they won’t come here, the last refuge of growth and safety in the world where the Bluebird of Happiness lives.

One of the predominant themes as I have mentioned is recession denial. Obviously Achuthan and Hussman are idiot perma-bears or worse.

From Marketwatch:

Consider that the last two times Achuthan leveraged his cycle research to make an out-of-consensus recession call were March 2001 and March 2008. After the first, the S&P 500 rose 14% to its 10-month average in May before falling 32% over the next 16 months. After the second, the S&P 500 rose 9.8% to its 10-month average in May before collapsing by 42% over the next nine months.

The reason for the lag is that ECRI’s calls come early. That’s why they are called “forecasts” rather than “observations.” If the past two examples provide any guidance, the current rally has a shot at rising to the 1,230 to 1,280 level of the S&P 500 before turning tail. On Wenesday, the index closed at 1,209 after falling by 1.3%.

As of today we’re at 1267 on the S&P (more or less) and the peak of this rally has been – so far – the low 1280s. The 200 day moving average (10 calendar months, approximately) is at 1237. Just saying. Oh, and I’m short via puts from about 2320 basis NDX.

The party is over. The big party, the welfare state run on OPM, is over. It is time to head for the coat room.

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