It is instructive to see how the markets react in the face of good or bad news. Fundamentally, there is every reason to be bearish.
The latest BoA/Merrill Lynch Fund Manager Survey shows extreme levels of bullishness, which is contrarian bearish.
I awoke this morning to see that China had hike reserve requirements again by 50bp. The Shanghai Composite was down 0.9% but Hang Seng was up 1.3%. Europe is mixed. As I write this, ES futures are actually up marginally.
Momentum remains positive and it's overpowering the bad news. The old me would have been very bearish here but now that I have embraced the Dark Side I am still giving the bulls the benefit of the doubt.
The trend is your friend, until it isn't.
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