It seemed for a minute that reality would bring some semblance of market-pricing to U.S. and global markets, because it's much needed.
But then central banks stepped in... again. I knew they would.
No, I'm not surprised that, all around the world, central banks continue to manipulate market-moving pawns across a chess board. And by pawns I don't mean economies, I mean equity market prices for banks, bank debt, and sovereign debt.
What is surprising is how blatant central bankers are becoming about the manipulation.
Under these conditions, the market - let's call it the "Extend and Pretend Market" - has some big opportunities and some pitfalls for investors.
So let's have a look at what's in store...
The Bankers Came Out and Said It
Like I said, I was surprised by the straightforward admissions of "Super Mario" Draghi's European Central Bank, especially in terms of what they're doing to help banks directly in the line of liquidity and solvency fire.
They basically said, "We're doing this to get banks flush. Oh - and to get them to lend into the economy." They had to add that for the sake of not being 100% obvious.
You see, every time some banks get close to some cliff, central banks rally their guns and fire off whatever ammunition they have left to stave off potential failures.
That's the nature of the extend-and-pretend game, as masterminded by central banks.
Every central bank everywhere has turned its back on savers and capital expenditures to prop up faltering banks...
And in the United States, the Fed is standing pat on interest rates even after the market bounced and the dollar softened up (which, by the way, is exactly what the Fed was supposed to be looking for).
That's par for the course these days. But we could be in for a turn to the worse...
I've Seen This Movie Before... and I Hated It
What scares me is that the global markets' rallying looks more and more like the optimism in the spring of 2008, which faltered, of course, then gathered steam again in the summer of 2008... before everything collapsed in the fall.
Short positions that by all rights should be up by double digits are losing out because of this central bank sugar-induced coma, and believe me, I hate that.
So, it's "bad news is good news" all over again.
"Things are so bad that they're going to get better because the central banks will make them better." That's the "buy the bottom, here come the fire hoses" mentality prevailing right now.
Commodities have rallied. But they've only rallied on speculative bottom-fishing off long-cycle lows. The bottom isn't in for commodities. Mark my words: We'll test the lows again in a month or two, maybe over the summer.
The bottom may not be in for oil either. Rumors and hoped-for agreements to curb production have rallied oil from its lows, and short-covering looks like it will push WTI over $40.
That's all well and good, for now. However, there's no big uptick in demand for commodities, or oil, or industrial materials in the face of the IMF constantly ratcheting down global growth prospects.
But don't count on the markets to come to grips with that reality. They can stay irrational longer than anyone can stay solvent.
They'll go for this instead...
Here's Where the Markets Need to Go
So long as investors believe central banks aren't out of ammo and are going to keep firing their bazookas, markets will grab hope that all the weak links can be fortified long enough for some kind of growth to get us out of this negative loop spiral.
That's not going to happen. But, just like in 2008, we can keep on rallying until the bottom drops out.
Right now we're right around 17,500 on the Dow, which is where all the magic happens - if we can stay there by magic, err, I mean well-founded belief that we're out of the woods and the lows we saw in February are long behind us.
If we can stay above 17,500, I'm planning some radical moves for my Short-Side Fortunes and Capital Wave Forecast portfolios. I'm going to make some recommendations here, too.
But we're not there yet. Almost.
On the other hand, short positions could still turn around. We've got a window through March 25, which by my time cycle analysis calculations could mark the end of this rally.
Either way, we'll be in great shape. Unlike the markets and the global economy, but that's not what we're after.
It's tough facing the wrong end of a bull, but I've been here plenty of times before, and I've never failed to turn a setback around and ring the register.
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About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.