There's a reason we flipped bearish ahead of the holiday last week as the run-up seemed fake, Fake, FAKE – just more low-volume, manipulated BS on bad news that lead to the anticipation of more QE but, as I noted earlier in the month, the G20 already fumbled that ball and the bears, while not yet in control – are certainly marching back down-field.
Remember, our bullish premise was never about anything more than QE and there was simply not enough QE offered (at $10Bn per S&P point per 6 months) to push us back over 1,400.
Now we face the potential horror of earnings season which may be somewhat abated by the accounting changes allowed in the Transportation bill that we discussed last week. While those changes may provide a one-time boost to earnings of many Billions of Dollars – the strong Dollar will also be a big negative to the recognition of International revenues and International revenues ain't so hot in the first place.
While taking some bearish flyers over the weekend (see Stock World Weekly for details) - our primary position is to stay cashy and cautious as we watch this little drama play out in earnings' first week. AA reports tonight and we'll see how they end up accounting for their substantial pension obligations under the new rules and that will give us a big more of a clue as to how to play the rest.
IN PROGRESS
