Winter Eventually Sets In

Despite some big names on Wall Street weighing in with rather bullish commentary over the last week or so, be it David Tepper wanting to ride the horse, Ray Dalio slamming cash as trash, or Paul Tudor Jones implying a dot-com blow-off is just around the corner, the reality is that a near-term pause still seems more probable than anything else right now. 

After shorts expecting a post-New Year's selloff (that Iran news was their best chance) likely covered in frustration into the long, three-day weekend, it is worth remembering that the post-MLK Day seasonality is typically not too bullish for stocks in late-January, especially during Election Years. 

And with major earnings reports coming up over the next three weeks or so it is completely reasonable to even look for a correction or "sell the news" reaction, starting with Netflix tonight. 

However, bulls markets, especially those with increasing enthusiasm and public participation, as this one is garnering, often go through stretches where logic is not necessarily part of the equation. In other words, in order to finally get to the late-stage euphoria, one needs to see a bull market defy logic as often as possible. Bears will argue we have been defying that logic for years now, of course.

But the larger point is that calling tops remains a uniquely arduous task, likely much more difficult than calling a bear market bottom, for example (which is no small task either, by the way). Case in point: Look at both SHOP and TSLA, both wildly strong but extended names of late, up sharply again this morning and undoubtedly causing great pain for stubborn shorts. 

That said, my bias is to tighten up a bit and see how the first wave of earnings this week is negotiated by markets. FSLY is a name I am still long partially and looking for a squeeze right here, right now above $24.60.

I also want to see Treasuries and precious miners use any respite in equities to come into their own and offer tradable rallies.