This time we’ve really done it. We’ve gone over the edge altogether. We’ve managed to strap together a suicide belt and an Evel Knievel Snake River Canyon rocket booster and leap from a Cessna with a bottle of Maker’s Mark in one hand and a picture of Lindy Sue in the other.
And there’s no turning back!
In this issue we stick out our necks and call the market like John Wayne in Bozo for your Birthday, the movie he did before that lymph operation made him kingpin of the Hollywood agency wars.
We’re shooting from the hip, so keep your heads down and listen.
The Facebook (NASDAQ:FB) market was reborn earlier this week – on Monday, the 28th of April, to be precise – when shares of the world’s greatest time-waster snuck below the bottom end of their late January gap, effectively closing the book on a technical formation that’s kept chartists tapping their fingers for some three months now.
Have a look –
We’re well aware that not all the technical’s are in place for a long side trade at this stage, but as we said, we’re sticking our necks out.
Because the gap has been filled (thin red line).
It’s taken three full months of waiting and wondering, but the process is complete. The Facebook Market has taken its cue and the rest of the indexes should recommence their climb toward the most foolish of heights forthwith.
And yes, we can also see that both RSI and MACD (in black) are indicating continued bearish action. But those two markers notwithstanding, we are attempting the impossible here – catching the proverbial falling knife and suggesting that you buy, buy, buy shares of Facebook today, hand over fish.
That’s the world we live in, isn’t it?
Facebook has Bottomed; Buy Facebook
A long side, deep-in-the-money CALL is your best bet for riding the Facebook insanity into mint julep heaven. Get the longest dated strikes you can find.
We Now Turn Our Attention to…
Where else? The headlines.
We noticed that today’s Wall Street Journal, along with certain of its affiliates, ran a number of headlines that were diametrically opposed to our take on things.
They read as follows –
Crashy Marc Faber: It’s too late to buy U.S. stocks now
Our comment: Late, yes, if you’re keen on missing the greatest stock blow off in history.
China is no Place for an Investor
Ditto: China’s market turn looks imminent, and could outpace America’s.
Why Teens are Rebelling Against Facebook
And smart investors aren’t.
Risk of 20% Correction Highest until October: B. Of A.’s Suttmeier
Risk of missing 20% upside equally great.
Tired Bull Yes, we’re also plenty tired of the bull.
The pessimism is a thick brown and oozing from places it shouldn’t.
The long and short of it is that the stock market is going up, and if you want to make money from it, you’re in. And it doesn’t make a whit of difference if the fundamentals are there or not. The days of careful examination and sifting through balance sheets is over – sorry to say.
As our colleague, Hugh L. O’Haynew, wrote exactly one year ago in a letter prophetically entitled Now Everyone is a Speculator –
As we’ve said many times, if there’s no good reason for stocks to rise outside of the obvious swell of liquidity that’s buoying them – then let ‘em rise. And let ‘em keep rising until they stop… Yes, corporate profits may grow, but not nearly enough to justify the multiple expansion we anticipate seeing in the months and years to come. And stocks will rise alongside, completely divorced from the economic numbers and earnings that have traditionally underpinned them. At that time, everyone will have become a speculator.
And that’s where we are today.
Hugh’s wisdom is not an easy pill to swallow, however. As one righteous reader put it just this week, inter alia –
[Y]es, in the current conditions the upside is and has been much easier for some time, but you really shouldn’t expect the uninformed public to buy your already overpriced positions just because they don’t own them already.
On the contrary…
That’s exactly what we should expect.
We believe that every right thinking person – that is, every person who is prepared to see the market reality before him for what it really is, must and will buy, because to do anything else in the name of ‘investing’ is utter foolishness.
Reality is a liquidity driven market that will push higher without fundamentals and without economic underpinnings.
If you don’t want to align with that, expect the worst.
And send regards to Lindy Sue.
Many happy returns,