More to the point, while not necessarily giving up on my general thesis of the market's eventual destination, I think that the opportunity exists in the short-term to play the other side of that trade (to my eye, perfectly appropriate given the reference to Keynes above).
The obvious question, why? Let's start with the charts -- as suggested, the market has held up. However, it is still within a range (1120 to 1215ish) that needs to be broken to the upside before I will have any conviction to put money behind the idea (see 3 month daily below).
As for the fundamentals behind the idea (actually, "fundamentals" is to misstate it completely, because this trade is totally based on more parlor tricks -- in other words, nothing's changed, the can has simply been kicked down the road a little further), I give credit to Bill Fleckenstein (and his network) for identifying the following: the announcement out of the ECB about the 12-month and 13-month LTROs should provide enough liquidity to relieve (for now) a lot of the pressure that was building in Europe. Specifically, while not out-and-out monetizing of debt, the ECB is providing liquidity to all 7,500 banks that have access to it in exchange for whatever questionable collateral they offer up. And given that Europe's plumbing issues were the biggest reason to think we were (are) headed lower, this move should put many minds at ease and get the hedgies and other money managers to put their money back to work.
Thus, the landscape is now a little different. And if it plays out, my plan is to buy some end-of-year SPY calls to get a little leverage on it.
