Like A Moth To A Flame – Trading on Hope

Feels like the market is trading past the recession and running before it even walks.

The PMIs have just arrested a downslide and S&P is nearing its 4 year high.

Its on blue moons that we have all the asset classes rallying simultaneously in January.

Possible Reasons : Dilution of Money ? BOE, BOJ, ECB all printing in unison. Yet EUR/USD is higher?  War News ? Only expressed in Oil prices.

Check this out. Tipping off the precipice in the yellow S&P line ?

Its quite delusionary . Just like the subprime CDOs. Lets sell it because everyone else is and lets buy more because everyone is doing the same. Must be a nice feeling to be caught up in that happy oblivion, markets racing ahead on a bit of good news and a lot of Hope.

Seriously, is there a need to buy so much oil when we are heading into a recession ?

If its stocking up for war, then why are stocks flying ?

All contradictory in the face of European bank losses and corporate profit warnings.

Assets are all trading in a new range now and that is why the funds are back with a vengeance to long. But only 1 will be right ultimately.  Will it be stocks, bonds, gold or oil ? Or Eur/Usd ????? If you put a gun to my head and choose, the surest bet would be the EUR. Its heading smack into a recession that may take a while to shake off. CDS triggers coming up next week which would be a messy affair, the rest of the PIIS in the PIIGS are still on shaky ground, and, peripherals like Hungary are going down.

As for the rest of the asset classes, my bets are off. How much higher can you go without the help of PMIs ? I will miss any further rally but it also means  I won’t miss the crash this time round.