Were we down on JPM, downgrades, or Greece? The number of bullish messages I received today outnumbered bearish ones by about 5:1. It’s all priced in is the key message. We will see, but so many people are afraid that Europe will rally Monday that it is either eye-opening or head scratching. I think Greece is bigger issue than the downgrades but they are not trivial (although the ECB abandoned ratings based criteria, not all institutions have). Lost in the chorus of “it’s all priced in” was any discussion of why earnings and economic data seem mediocre.
It feels like there is a huge divergence – commentary is biased to bearish side – but positioning is positioned long. Many bulls seem to believe they are in the minority or they are contrarian yet II shows bullish sentiment at a 1 year high and it looks like short interest is at a multi-year low. I like my contrarian bets to be actually contrarian.