Understand the Negative Bias

 | Mar 04, 2014 | 4:11 PM EST
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People are not as giddy now as they were depressed yesterday. That's what's weirdly asymmetric about the market. The depth of depression of so many who came on air yesterday was pretty incredible. The put buying was endless. Most of all, the conviction that things had run off the rails was ironclad.

But all day today, I have heard that it's the futures and the ETFs and nothing else. It's as if today's totally phony and yesterday was real.

In truth, they are both real, but there remains a terrible bias about negative news events from overseas. This bias is left over from the bad old days.

We had, as I pointed out, a series of positive economic numbers that were totally ignored. Instead, we acted as if the German equity market is in charge of our economy.

So many people simply refuse to believe that there is perceived and actual strength in the U.S. that ensures that this linkage just doesn't pan out. Like it or not -- and many people do not -- the economy survived the winter much better than we thought with better auto sales and better home sales and, since mid-February, better retail.

This rally, which kicked off with Macy's (M) saying things had gotten better since Valentine's Day and Home Depot (HD) saying the homeowners along with the home builders are still spending, was derailed by Ukrainian woes.

Now it is back on with one difference: So many puts were bought that they are now propellant -- at least until we get to Thursday, the eve of the employment numbers release day, which is when I expect to see some sort of pullback.

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