The Pullback Memo

EconMatters's picture

By EconMatters




Pullbacks…pullbacks….are we talking about Pullbacks?


That`s all I heard for two straight months, “Gee everyone is waiting for a pullback to get in on the rally”. Well you asked for it, now you got it! But you better not be too picky about waiting for some exact perfect 7% correction because that probably ain`t happening. 


We are in the midst of the strongest four months of the investing cycle for each of the last four years. Basically, everyone and their uncle go long assets until late April before the annual summer selloff. Don`t expect this year to be any different. 


March 1st New Capital & Front Running


The way I look at it new money comes into the market March 1st which is next Friday, so any window for a pullback has 5 days to occur, and less than that because everybody front runs the monthly 401k money that comes into the market the first of every month, and is usually good for a major Risk On day. 


So investors have 4 days for a pullback, you get the idea, Thursday`s mid-day selloff was the pullback. There isn`t going to be any ideal 7% pullback so all those who missed the rally can conveniently get right in with the rally that they missed for the first two months of the year.


You think this stuff just happens randomly?


There are no do-overs in markets! What were you thinking, haven`t you been paying attention the last four years? You start going long in November of the previous year and you stay long until option`s expiration in April, then you sell, wait for the summer sell-off when some crisis in Europe or Downgrade is the end of the world, and after the sell-off, then everybody buys back for the “Money Manager Make Their Numbers Yearly Close”! 


We are working here!


Now get with the program, this isn`t the airport where we wait for passengers to board! This is the first four months of the year, and damnit we are making our numbers regardless. We don`t care how steep the freaking charts look, we are going to make them look even steeper. 


Nothing stops the rally, we don`t go backward, we just keep going higher till mid-April, Got it? Good, now quit your hoping, praying for the 7% pullback, we don`t have time for this crap! 


We don`t have time for no stinkin 7% pullbacks!


There are no 7% pullbacks in the first four months of the year when we are making are damn numbers. That would be stupid, we would have to start all over again, we don`t have time for that crap, we are working here! 


Have we set new highs yet? I didn`t think so…


We will give you your damn pullback at the end of April after we have set new highs in all the market indexes. So don`t ask “Are we going to pullback yet”? No we are not going to pullback, you will know when it is time for the pullback by checking the damn calendar!  


Here is the damn memo…..


Just so you know since nobody seems to pass around the memo anymore we run up everything for the first four months as high as we can, hopefully around 11%, then we short the market, and if we are lucky the damn thing goes negative for the year and we make another 11%, then we ramp it up at the end of the year back to the same 11% we know we can hit, and a little more if we are really good. 


So the market benchmark the S&P 500 is up 12% for the year, and of course we beat the benchmark dumbass we are professionals, just add the 11%+11%+12%=34% we blow away the damn benchmark and everybody wants to invest with us and we make more damn money cause now we got more AUM! 


So now you have the damn memo, study it, memorize it, live it and for God`s Sake quit askin about the damn pullback!



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SheepDog-One's picture

'New money'? Yea...sure.

Stud Duck's picture

Any fiat currency value is based on the confidence in it. TPTB are aware of it and doing anything possible to prop up the faith factor.

Since fall of 2008, the value of the US fiat has deminished more than 40%. and the people that have faith is deminishing daily.

The bought politicians are idiots and continuing to make the common man doubt their ability to run a donut shop much less a government.

The recent relavations about the FBI internal investigation has cracked the facade of that institution, the cracks are widening in all the institutions fo government from the city, county up to Federal level. No one has any confidence in their goverment other than more failure. The right blames the left and the left blames the right. When it collaspes, the right and left will go to killing each other over some off the wall ideology.

Get Gold, get ammo, (lots more of it than gold) , get a place in the country and get to know your neighbors. (take a country boys advise, don;t play your city boys, know it all games with country people, DON'T GET POLITICAL). Build a earth contact bunker, that is easy to heat and cool. Get at it now, time is running short!

NEOSERF's picture

By definition any pullback can only be that.  There are no sustained selloffs in this market anymore.  Any weak hands in retail are out in a matter of 2 trading days...then the volume vaccuum is quickly filled with BTFD Fed-supported computer algorithms that have no headwinds to ramp things up...would love to see a Friday especially prior to Monday holiday or in the summer that isn't 70% below volume and actually would go can't happen without some major crisis of which bank failures no longer qualify...I am talking oil spiking war or SARS like major epidemic...

DowTheorist's picture

The primary trend of the market is strongly bullish. While anything can occur, the odds favor a timid pullback and not the end of the current bull market. At least, not right now. The current primary bull market started in Mid November 2012, the odds favor its continuation as per the Dow Theory:



Clowns on Acid's picture

From the WSJ - "Any selloff we get is going to be shallow," said Scott Wren, senior equity strategist at Wells Fargo Advisors, which manages $1.2 trillion in St. Louis. "The mentality is, 'I want to wait for the market to pull back so I can buy stocks at lower levels.' The Fed's on our side, companies are making money and the growth environment is OK."

Everything is just fine.... Buy have to hurry ...but you won't be late!

Middle_Finger_Market's picture

The market is up, therefore the economy is doing great. Stop digging under the surface, stop looking at pointless retailer earnings and stop DESTROYING THE ILLUSION. Sincerely yours, your masters. 

ebworthen's picture

Well done.

And when Wall Street is done using everyone's 401K money for leverage, Washington will tax it into nothingness.

Ying-Yang's picture

is pullback like pull It?

I said, 'We've had such terrible loss of life, maybe the smartest thing to do is pull it.' And they made that decision to pull and then we watched the building collapse." –Larry Silverstein

Never forget!

moneybots's picture

In 2000, the Nasdaq ran up to about mid March, when the bubble burst before April op ex.  In 2007, the market topped out in October, before the strong period of the year. 


The economy has been slowing down and the market has flat ignored it.  I wouldn't place any bets on sell in April and go away.

BlueCheeseBandit's picture

Was wondering when to add to my shorts. Thanks for the confirmation EconMatters.

SamAdams's picture

pay attention - NEVER SHORT!  BTFD!  $85B/MO SAYS SO! - eom

BlueCheeseBandit's picture

Worked pretty well when I cashed them in in last falls mini crash, went triple longNASDAQ, then sold recently to short again, thanks.

Just because you can't trade doesn't mean no one can.

Imminent Crucible's picture

Was wondering when to add to my shorts.

Don't you get those emails that say "Enlarge your male member!"? I've been adding to my shorts for months now. So far, I can't see any improvement. In fact, I think it's shrinking.

El Hosel's picture

Avoid the cold to enlarge that member, add to your shorts when they start working.

Bicycle Repairman's picture

Trading in the land of HFT and insider info?  Good luck.

Swarmee's picture

34% eh? Sounds great. And yet I seem to recall a majority of hedge funds failing to beat the indices, let alone make anything close to 11% on the year.

Please update us on the funds pulling in the numbers stated or anything even close to it. And forget exogenous market events ever occurring in one of your holdings thus offsetting the gains in the rest of them, or the fact that this annual pattern is subject to probabilistic distributions as is anything and so tail events can and do h appen to individual investors. The herd may be within a few standard deviations of the pattern but it doesn't take much on a personal scale to mean your returns don't match the average.

Right holders of AAPL this year?

new game's picture

watch today as the blip is sold off

down the peeking order

inscammers almost out,

next out money fucks

then stock wannabees

then da plebs

bagholder's picture

umm... I think technically speaking 11% of 11% of 12% shouldn't be added - I think it should be multipled. however, if you're using the same capital from when you started, then you add them. But why would you do that? Just read the memo!

Edward Fiatski's picture

Very good article.

April is a great month to go short, apart from December, November, July, August, January, February, June, October, March, September and perhaps May.

Ungaro's picture

Amazing how these timing patterns work -- until they don't. The market usually corrects when the fewest people expect it. It goes up like an escalator but comes down like an elevator. Oh, and one last one: don't try to catch a falling knife.

dark pools of soros's picture

The trend is your friend when named Ben

max2205's picture

Sure. Like buy TNA at 2:30 everyday.  Whatever