Back to the Cave

Ok, that was a nice little mid hibernation beef snack for this bear in hibernation.  I covered the short and back to flat.  I am not on an aggressive short prowl yet, and I wasn't even looking to short until the conditions were near perfect,and the good news big gap up on Senate tax bill passing was irresistible.  Unless there is a screaming short in SPX, I don't plan to revisit until January. 

I don't want to make a big deal out of the past 2 days, but it is days like Monday which give little hints that the top is near.  I don't recall so many traders getting so bulled up over something(tax cuts) that has been advertised for so long.  Earlier this year, I was waiting for the tax cuts to be priced in before I got aggressive on the short side.  The move over the last few days from SPX 2600 to 2660 went a long ways towards pricing in those tax cuts and getting investors excited about the market.  If you look at the TD Ameritrade Investors Index, a measure of how much buying the active traders there are doing, it is going parabolic.  A lot of investors on the fence jumped to the bull side in November.  It is at the highest level ever recorded, over the past 7 years.

Europe is back below the post French election levels seen in May, and China H Shares have gotten destroyed over the past 2 weeks, dropping 7 percent, going back down to September levels.  Also, for those looking at fundamentals, copper took a beating, as copper dropped 4.6% yesterday, the most in any day in 3 years! 

China is slowing, Europe looks like it can't handle a stronger euro, and yield curve continues to flatten.  2018 will be very interesting indeed.