"There Are No Bears Left... None... Not A Soul"

Tyler Durden's picture

By Kevin Muir via The Macro Tourist blog,

Think back six months. Do you remember all the warnings from the legendary hedge fund managers about the impending stock market doom?

Paul Tudor Jones, Scott Minerd, Larry Fink, Seth Klarman, the list is long but distinguished. At the time I penned It’s too easy to write bearish pieces. Even in late summer, gurus like Gundlach were bragging about the 400% he would make on his S&P 500 put purchases - Billionaire Bears. Given the atmosphere, I knew posts about the coming collapse would be greeted with tons of words of encouragement. Yet if I wrote something about the stock market continuing higher, crickets… Or worse yet, remarks about my cluelessness regarding the problems in the global financial system.

I didn’t think stocks were going higher because everything was roses, no in fact just the opposite. Stocks were being pushed higher because everything was so FUBAR’d. Central Bank balance sheet expansion was pushing risk assets higher, and for the longest time, everyone wanted to fade it.

Fast forward to today. Even the most ardent bears have given up and embraced the idea Central Bank buying will push stocks higher. Investors that were previously doom and gloomers are now speaking of blow off-tops. I can hear the capitulation in their voices. No more brave predictions of the coming collapse. Instead, meeker forecasts of a high volume runaway euphoria. There are no bears left. None. Not a soul.

The bears have been replaced by gloating bulls that are openly bragging about how high the S&P 500 futures will gap up Sunday night. They are mocking the bears with taunts of how much money will they lose fighting the rally. They joke about buying the dip, which increasingly is becoming more and more nothing more than a couple of downticks.

I might not know much, but I know the Market Gods do not take kindly to that sort of behaviour. What was that quote from Bernard Baruch? “The main purpose of the stock market is to make fools of as many men as possible.”

Ask yourself what would embarrass most investors right now? Would it be a continuing rally? Not a chance. Given the white flag waving by the bears, and the over-enthusiasm of the bulls, there is little doubt in my mind that a stock market decline is what would hurt most. That wasn’t the case six months ago. Heck, it wasn’t even the case two months ago. But that’s where we are today.

I could try to dig up some sentiment numbers, but the reality is I don’t need to. The mood is plainly obvious. Investors are as bullish as they have ever been since the Great Financial Crisis. Sure, you might argue that it was much more frothy in 1999. But who cares? Do you really want to be buying based on the greater fool theory? Ask Chuck Prince how that turned out.

It’s hard standing alone and fighting the crowd. If it was easy, everyone would do it.

I have written about the new reality of how markets are now full of A Series of Rolling Mini-Bubbles, but a sharp Seeking Alpha writer by the name of Ian Bezek has done a better job than me of identifying the latest madness. In his post, An ETF Levitates: This is Not Normal, Alex points out that the IWC nano-cap ETF has been up 26 of the past 28 days.

This is the new reality. A series of rolling mini-bubbles. But you want to know the hardest part? Just when it looks best, is the time to fade it.

I can already hear you saying to yourself, that’s a big leap. Selling it because it looks good? Well, in case you don’t believe me about the series of rolling mini-bubbles (remember, the keyword is mini), how about this for a reason?

Almost everyone has now embraced the idea that Central Banks will push asset prices to the moon. It’s like they just realized that with the balance sheet expansion of the ECB, BoJ and the SNB (Swiss National Bank), the monetary stimulus has been higher than any time except for the initial days of the crisis.

One thing before I continue. For these Central Bank balance sheet charts, I have frozen the currency adjustments in time. If I let them float, then the balance sheet size will move around as the US dollar rises or falls. Since we are interested in how much the Central Banks are expanding or shrinking their balance sheets, this would lead to a distorted monthly change.

Let’s zoom in and have a look at this a little bit more closely.

It’s a little bit amusing that market pundits are now shouting about the inevitability of Central Bank buying. The reality is that from mid-2013 to 2017, the pace at which their balance sheets have been expanding has been ferocious.

The ironic part? All these pundits have figured it out just as the pace has started to slow. Look at the last six months. Slowest six month period in the last few years. And guess what? It will be negative soon enough. The ECB will taper, the Fed will shrink, and if financial assets keep screaming at this pace, even the BoJ and the SNB might be forced to slow down their purchases.

So yeah, knock yourself out buying stocks because Central Banks are printing like mad. Instead of examining what they did, I am more interested in what they will do. And to me, it looks like this game is nearly over.

Nothing sums up better the crazy rush into stocks than the recent headlines.

Remember the last time the Economist came out with a bold cover like that?

So let’s sum it up.

We have the bears capitulating and accepting the inevitability of the Central Bank buying pushing up asset prices, at the very moment magazine covers are shouting about the “bull market in everything.”

 

We have nano-cap ETF’s rising more in a period of a month than they have ever done before.

 

I have former bears telling me how we need to have a blow-off top before the true bear market can start.

 

As far as I can tell, there is absolutely no one who thinks this market will head lower over the next month or two. Well, sold to them.

Given the dirt cheap options they are all selling to gather extra premium (it’s free money after all - stocks never go down), I think taking the other side of their trade via long put positions is a great risk reward. I know this trade is lonely. Jeez, as I write this, a little bit of me wonders if I have gone insane.

But I take comfort in the words of a famous speculator, Jesse Livermore - “The obvious rarely happens, the unexpected constantly occurs.”

Then again, Livermore killed himself in the cloakroom of the Sherry Netherland Hotel. He left a note that he was tired of fighting. Good thing Jesse isn’t around to see this bull market.

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GlassHouse101's picture

Drinking/partying now . . Jumping out the window later.

YUNOSELL's picture

In China, Bears are Bulls and Bulls are Bears -- Just listen calefurry

Automatic Choke's picture

No bears left?  Wrong, I'm still here, and not quite broke yet.  

 

(edit/postscript:    in my long investing history, i have very rarely been wrong.....but i am almost always disastrously early....)

The_Juggernaut's picture

The thing that would embarass most investors now is having missed out on the current bull run.

The_Juggernaut's picture

Oopsie!  Downvoted by someone who missed out.  lol!  Sorry loser. :-)

Automatic Choke's picture

'twasn't me, i suspect you may be right....

Manthong's picture

Those covers are a stitch. :-D

 

“Good thing Jesse isn’t around to see this bull market.”

Yeah, he would likely commit ritual Seppuku on the ground in front of the “Charging Bull” at the intersection of Broadway and Morris streets in Manhattan.

Charging Bull

 

Manthong's picture

 

“Drinking/partying now . . Jumping out the window later.”

https://www.youtube.com/watch?v=4k2L7oNMDe0

(1 min 42 sec)

Ghost of PartysOver's picture

OH CRAP!  The Economist agrees with my positions.   If Time comes out with a cover or NewsWeek or any of the other pathetic rags, I am selling everything and moving to my Island lot.  Will pitch a tent if I have too.

PT's picture

Compulsory Superannuation.

All that money is coming in all the time, even if it has nowhere to go.  They have to do something with it, no matter what.

But we'll all retire rich!!!!    lol

scraping_by's picture

Those of us out in retail land know we're last for the exit if things fell off the table, so they're not talking to us. Pensions, now, they think they're insiders so are at risk.

lil dirtball's picture

Oooh ... charts!

In other non-news - fallout:

https://www.wsj.com/articles/youtube-tweaks-its-search-results-after-ris...

"In response to criticism of some search results on social media this week, a person familiar with YouTube said the company is accelerating the rollout of planned changes to its search engine. On Wednesday night, the company began promoting more authoritative sources in search results, especially for those about major news events, the person said. YouTube doesn’t disclose how it determines which sources are authoritative."

(((Authoritative sources))) ... lol.

The truth is an offense - to (((some))).

lasvegaspersona's picture

If you get to spend it all before the next crash then congrats!! You Are  A Winner!!!!

If however you lose it all or the dollar craps out before you buy gold...you are just another sucker. 

Time will tell...a long period of time will tell even more.

ReturnOfDaMac's picture

It's different this time ... and there are STILL wayyyy to many loud-mouthed bears.  Everywhere I look.

Chandos's picture

Consider me embarassed...

Eyes Opened's picture

They're all in the woods shittin with Hillary (or preferably ON Hillary )

FreeShitter's picture

CTRL-P owned them all.

UndroppedClanger's picture

CTRL-Z CTRL-Z CTRL-Z It's not workiiiiiiing

The_merovingian's picture

It's not rocket science, it's about money flow.  As long as CB's keep printing and some of that money goes into equities, the stawks will go up. 

lasvegaspersona's picture

Dr Gono (Zimbabwe's Janet Yellen) could (and did!!!) make the market rise.

The trick is to do it without killing the currency.

When CBs stop holding the massive effusion of paper the USG has created over the past 60 years...Gideon Gono wil look like a genius.

DOW 1 million here we come!!! Warren Buffet will finally be right!

ReturnOfDaMac's picture

+1 for referencing my personal hero, and greatest central banker of all time, the great Dr.Gideon Gono.

balz's picture

The Economist headline isn't all that bullish. They ask if the assets price are too high, so maybe not as clear a sign as The Mighty Dollar one.

katagorikal's picture

Not as contrarian as the infamous "Drowning in Oil"
when oil went from $16 to $147 over the next 9 years.

The Duke of New York A No.1's picture

Stock market sell-off's not allowed during FED balance sheet reduction ... Casino operators cant have any glitches ruining their plans - not hard to figure out.

 

 

 

 

Liberaldisdain's picture

They are all on ZH reading morons telling them how to loose more of thier money. 

MAGA new highs! 

 

Bubenthauser's picture

Fuck off.

Gotta love Livermore quotes. A million years ago, it all happened. Fuck this. Fuck you.

 

adr's picture

The bullshit market in everything. 

Even electronic phantoms based on internet memes are worth billions. 

I wonder if they dance around in the ivory tower C-suites like the Israelis on the van when the twin towers were hit? 

FreeShitter's picture

Jeez dude anything EVER positive outta you?

NYC_Rocks's picture

All makes sense.  The central banks may have slowed down, but they cannot go backwards in a material way.  There is just too much debt everywhere.  They keep giving "forward guidance" on what they will do but never do it in a material way.  It's because they can't.  Perhaps the market understands this and know the only political way out is to keep printing and inflating the market.  We shall see.

djrichard's picture

13 week treasury is not saying boo.

SloMoe's picture

THe CNN "Fear & Greed Index" is at 93-94. What's the high for that? Not sure I've seen more than 94...

http://money.cnn.com/data/fear-and-greed/

rbianco3's picture

I learned my lesson shorting the market a few years ago.

It should have gone down but did not. I've never been so wrong in my life- so have come to accept the market is going to infinity (hyperinflation wins)

mjcarr51's picture

I must be the last 

 

 

1

mjcarr51's picture

It really is amazing though.

 

Recently, ........ every single day.

 

It will not back off.

LawsofPhysics's picture

Duh.

THERE IS NO MARKET FOR TRUE PRICE DISCOVERY!!!!

Your move Mr. Yellen.

Creepy Lurker's picture

Seems to me a crack-up boom would last more than a couple weeks. But then, you could argue the past year or more has been the crack-up boom. What the hell do I know.

Rebelrebel7's picture

Wrong. I am a bear. I guess that you thought that I had died. I am the terminator bear.

Hkan's picture

Insane is normal or we would all go insane.

Bulls cliffhangers.....daredevils.....just normal insanity.

When the floor caves in.....true rock'n'roll.

Seasmoke's picture

Other than when I lost Gold in a surfing accident.
I've never ever once thought about shorting this ponzi fraud bubble not even one JooBuck.

Is-Be's picture

a surfing accident

Did you loose your shorts?

Gamma735's picture

At the end of the night, everybody has to pay their own tab.

LawsofPhysics's picture

except for the dead of course...