For so long we were hearing the correlation in the market was that if the market was going up, the dollar would go down. Shorting financials and long gold seemed to be in vogue because any rising market would come from a bank bailout (read: dollar negative), right? Otherwise the fins were going to tank along with the indexes, right? WRONG. In fact I was quite convinced we were about to see a break in that correlation when the dollar bottomed. This was usually met with laughter because of "the R-squared synchronicity of the world says this can't happen". I was convinced the Fins, Reits and Consumer stocks would be the new leader. However we have seen this correlation get far-stretched and mean reversion is not unreasonable. A bounce in commodities will lead the indexes higher.
From a previous post titled 'Making the case for HE':
- First off this is not a ticking time bomb. It has long tic'd it's last toc (been in motion a while).
- The [bear] market is known to deliver max pain in each direction.
- A general bias in the market is to go up
- Green Shroom hallucination
- You probably hear "CRE Time Bomb" at the local VFW Post #42.
- They need to raise several factors more in capital.
- Earnings season
- The [fraudulent] maneuverability for earnings.
- The debt holders of the CRE are small banks and large banks alike.
- Underwriters of the offerings are banks.
- Bernanke/Geithner
- HB&B(and oil) underwriter who we all have grown to love: Goldman (pronounced like the Seinfeld, 'Newman'), JPM, etc...
- SRS-flipping-Stocktwits
I've said this in the past...When the bulk of the market comes to expect something, it usually does not happen until it has destroyed the confidence on both sides of the fence.
