The S&P Has No Business Being Above 4,000 Right Now

CNBC's Bob Pisani was boasting about how loyal ARKK's shareholder base was this morning, as he inferred from the lack of shrinking shares outstanding that Cathie Wood's believers were firmly intact.

While I agree that Ms. Wood has her loyal band of holders, it is important to note that Wall Street history tells us that strong bear markets, as most of ARKK's holdings are in (including the ETF itself, obviously) only end when the loyal holdouts finally succumb and throw in the towel. Needless to say, I fully expect ARKK's shares outstanding to shrink in the coming quarters. Clearly, we are a long ways away from blood in the streets with growth stocks.

And that brings me to my next point: If you are going to call yourself a contrarian here, you had better actually be a contrarian, especially when fighting a strong trend. I am seeing plenty of folks on social media and on television who are almost blindly assuming that being bullish here is a contrarian position. This is a lesson all of us have learned at one time or another. And as with most things in life, it is not enough to simply learn the lesson--We must then apply the lesson going forward to future situations in order to avoid constantly making the same mistakes. 

All of this is happening as the S&P 500 lingers above 4,000, despite the head and shoulders top confirming lower into each failed bounce. As I write this now, for example, some growth/tech dip-buyers are giving it another shot. However, the law of diminishing returns looks to be setting in, both literally in terms of actual returns, as well as psychologically, with past glory during the QE/ZIRP era being stomped out this time around as we embark on a tightening cycle potentially into an economic slowdown. 

And for those betting on a Fed "pivot" to a more dovish stance, given the political pressures The Fed is facing there is almost no chance of that happening with the S&P still above 4,000.