Sure, we want growth; at the same time I don’t believe interest rates are going to jump enough that it actually impedes business expansion or transactional activity. I do believe Morgan Stanley saying today ‘Client Cash Balances’ are low is not encouraging. Now months ago Merrill Lynch said ‘high net-worth investors’ were selling a lot; and obviously that was just a bit early (for some stocks not others). So which is it? Both.

That’s rotation and that’s why so much of the sustained S&P move has been a result of the use of ‘leverage’ rather than fresh money coming in. Now for sure, if there is no exogenous event. and they can keep this together past a jittery year-end, you’ll get new seasonal reinvestment money coming in and a further move higher. That’s part of why I’ve suggested a correction, not a Bear Market (yet) and not a gloom-and-doom catastrophe many others have suggested.

That many were trying to short, kept me from doing so. Now that they have apparently ‘all’ capitulated to bullish or neutral; I’m thinking risk of playing (a bit, not heavily) for the downside or a Volatility increase is relatively low risk compared to other times; and I said that during rallies in recent days. I note it this way because Tuesday’s 40 point Dow rally was actually a declining or erratic session; with breadth divergence and not much underpinning it.

In sum: we may or may not break. However this is stretched and most are on the long-side of the ledger, with even the staunchest bears discredited or capitulating. While I have no issue with future investments doing well or for that matter a higher peak; you do have the ingredients present not for a big bubble bursting of the magnitude of 2007 or ’08 or 1999-2000; but you have ample justification for a correction.

That might be mild or severe; and we’re not worried about assessing that (it’s a fool’s errand). The market will tell us to a degree, and the idea is to be sufficiently comfortable with long positions that are core (and avoiding taxable events); while having ample cash reserves on-hand (absolutely no margin debt), and being postured to take advantage of a decline that might be just a dip; or it might well be something more.