Bearish for the Sake of Appearances

 | Feb 29, 2012 | 6:32 AM EST
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When I first got into this business, people always used to talk about the health of the market. That meant intangibles, like is there good leadership? Do stocks go up on good news? When a company reports a better-than-expected earnings report does it rally? Are many stocks going up and not just stocks in certain sectors? Is the breadth good? Is there plenty of cash on the sidelines that could still come in? Is the Fed on our side, or against us? Is the economy overheating or is it holding steady, so the Fed will not become our enemy?

Amazingly, every single part of the checklist of what made for a healthy market is on display here. But you know that if you even for a second say that, you will be viewed as some hysterical cheerleader who will, by have to have his head cut off. It's that simple. You are either negative or skeptical or willing to call things a bubble and be shaken out on a moment's notice or you are a moronic whistle-past-the- graveyard fool.

No one wants to be the latter.

So, all of these terrific characteristics just don't get heralded, like the fact that the leadership is so palpable. Oh, and Apple (AAPL)? That's the ultimate leader. Or that the breadth by sector is amazing. Just yesterday the banks, the techs, the healthcares were all on their game. Or that the money is STILL going to the sidelines despite the advance, with five times the amount going into bonds than stocks.

Then there's where the Fed is. The Fed wants you to buy something, anything, a house, stocks, you name it. Anything but bonds! But it seems that people can't be tempted. They want safety no matter what. We are only just beginning to get levels that are even remotely close to where we were four to five years ago, and I am not talking just about the stock market.

How can this be? Why is everyone so afraid?

First, the stock market's been so horrendous for so long that no one believes it can ever be good and that most runs are either short squeezes or moves on -- have you heard this? -- such thin volume they don't matter. I say balderdash to that. You want to sell a million shares of Apple? Not a problem.

Second, there aren't enough older people left who have the ability to say "when we saw this pattern last it led to dramatically higher prices." The people we turn to always seem to be always bearish or permabullish or so wishy-washy that when pressed they disavow any knowledge of being positive.

Finally, there is zero percentage in championing the market. Everyone remembers a bull who is slaughtered. No one remembers a bear who misses a few thousand points if the market ultimately slips back down 500.

I think one of my jobs is to simply point out that these characteristics right now are the characteristics of a real good bull market and not a short squeeze or an interlude before a crash. I write that because it wasn't the other times I have seen it. The market had to go considerably higher and the Fed had to fight you to get out of the bull ring.

Sure, it can be different this time. But the past says we are OK. Sometimes we just have to embrace it.


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