MarketVVizard's Market Thoughts: From latest public Trimtabs [Dec 22]

» MarketVVizard - From latest public Trimtabs [Dec 22]

From latest public Trimtabs [Dec 22]
(which I think has some good points as always):
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BOTTOM LINE: WE TURN FULLY BULLISH FROM CAUTIOUSLY BULLISH. ABSENT AN EXOGENOUS SHOCK, WE EXPECT TO STAY FULLY BULLISH THROUGH JANUARY.

We turn fully bullish from cautiously bullish. What's more absent an exogenous shock, we expect to stay fully bullish through January.

The reasons are simple. Both the new offering calendar and tax selling-whether to offset losses in prior years or to offset losers against this year's winners-are winding down. Thus, the supply of shares is diminishing. At the same time, not only do inflows from individuals-undeterred by the usual December concerns about taxable distributions-and from pension funds remain heavy but corporate buying has resumed.

HANGOVER FROM STOCK MARKET PARTY WILL AWAIT BINGING INVESTORS EARLY NEXT YEAR.

Investors should enjoy the stock market party while it lasts. For a few weeks, the liquidity picture should remain wildly bullish as the new offering calendar lies dormant. At the same time, individuals will be chasing the rising market and pouring year-end bonus money into equities.

Beginning in February, when insider selling will resume in full force and public companies-the house in the stock market casino-begin printing more new shares than investors' cash can absorb, the festive atmosphere on Wall Street will start to ebb.

Previously we had written that a spike in tax payment related selling this April should end the bubble. What we didn't realize was that most investors - who don't follow liquidity theory - have huge tax loss carry forwards.

In our model portfolio we will buy five March S&P 500 futures. By moving to fully bullish from cautiously bullish we boost our exposure to equities to 100% from 50%.
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I said before that I thought the Google IPO would come within 2 weeks of the market top. I have decided I will wait until Feb to get seriously short. I will still stick with my plans for now though, and open a small short position on the QQQ this morning with a stop 1% above the 52-week high.

-- posted by MarketVVizard