Long Up The Wazoo They Are 6/4/07 7:00 AM

"The market is full of frustrated bears," says John Roque, senior technical analyst at Natexis Bleichroeder, a New York-based investment dealer. "But they're not going to get any satisfaction anytime soon, even if this market is equally full of dissatisfied bulls. No one is running around waving their hands in the air and yelling "yippee" in excitement" in response to the market's big gains this spring. -- Barron's 6/4/07

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No one may be going around yelling "yippee", but in Sandra Ward's very excellent interview with Steve Leuthold, one of the all-time greats, I have confirmation of my informal, anecdotal feedback from my hedge fund pals Anthony From Brooklyn, Bird, and a few others, and it tells you that it's important to know what people are doing as opposed to saying:

 "We've already seen it happen with the hedge funds, which, if you look at the [International Strategy & Investment Group's] numbers, are about as long as they could get."

Right.....long up the wazoo the hedgies are, and that's a wad of hot money that's going to fly out of ETFs and index futures if and when the going ever gets roughs.

By the way John Roque is a very good technician, and he talks above about commodities as still playable and maybe they are, but take a look at this chart from Committements of Traders.com which may mean nothing or could be a foreshadow of things to come, as I say in my best imitation of an Insecurity Analyst

So here we are, and there all of these TD Seq/Combo Sells firing off on the S&P 500, the S&P 500 Equal Weight Index, the Dow Industrials, and and the Nasdaq 100.

Despite the fact that these Daily DeMark signals -- practically all of them sells because of this huge bull move -- have been almost 80% correct, they are not a rationale for selling everything and going short......not by a long shot.

They've essentially been signals that the uptrend may pause for a day or two, and with the major indices -- SPX, RUT, Nasdaq Comp, QQQQ, Cyclical Index -- up 5 straight days, that may be ready to happen again.

It's also a risk, perhaps a case of arrogant hubris, to believe that the equity market is going to give you a personal heads-up that it's all over and the top is in. I don't believe that it's possible to time things so well, but I also don't feel that the top is in.

Why?

Mostly because it doesn't feel like 1987 or 2000 -- and I've been involved in both -- when it was an obvious in-your-face fact that "everyone" believed that it couldn't go down. Yes the hedge funds are very long, but I think -- apart from an exogenous disaster -- that the mutual fund louts are going to be forced in......could be wrong, but since I take the action day to day, and even hour to hour, I'm prepared to start cutting as soon as the action sours.

This weekend I also thought about that VIX call option strategy that The Professor is meshing with his long ETFs and index futures -- yes, the idea that a bear is doing this bothers me some -- but I think it's a waste of money right now because we're going to enter into that summer period where -- absent that exogenous event -- volatility is going to start it's seasonal melt.

Right now it seems smarter to carry more cash if you want a hedge, and possibly ETF puts, than to throw more cash away in a wasting piece of paper

Hopefully I won't have to rue those words, but that's how I see it now, subject to change of course.

There's much to think of as we enter almost a half-year gone. I'm on target for my usual yearly objectives, don't want to blow it, and will quick to dump positions if things get bad, but I also want to remain part of this herd as long as possible.

Meantime, here are some of the best looking charts I've found recently.

Stephen
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BA

X

CLF

PCU

CCJ

AMZN