Market Update: Turning Cautious As the Stimulus Checks from Our Grandkids Arrive

With all the pessimism and fear in the midst of all this artificial stimulation, this market has been a pretty good set up for the long side and being bullish. After leaving the business entirely myself and having my Mom take 30% of her savings out of the stock market back on air late last year, I got bullish in March after the markets had dropped 20% and had my mom put 1/3 of that money back into the markets. But as I hinted on my Big 3 during Happy Hour Friday, we're getting closer to needing to be sellers rather than buyers of stocks again.

It's not exactly been straight up, but the markets have indeed put on some meaningful gains since the Bear Stearns Bailout Bottom created enough panic to get real capitulation in the markets. And that capitulation did indeed put in what we now know is a meaningful bottom, as I'd thought it might at the time.

Yeah, since the Republicans and Democrats in power teamed up with the Fed to print $30 billion of dollars and give them for free to the richest people on the planet, including $1 billion exclusively for Bear Stearns' shareholders (what their equity has to do with making sure our financial markets are functioning, which is the reasoning the Repubs, Dems and bankers have used to rationalize the theft...which in my mind undermines any of their credibility in claiming all these hundreds of billions that the government's giving to Wall Street has anything at all to do with maintaining functional financial markets -- but I digress a bit), the markets are now up double digits. The Nasdaq's up 12% since then!

I'd been saying and writing that we'd want to be long until about May 15 when those checks from our grandchildren's savings start arriving from the Republicans and Democrats in power who want to buy your vote with your kids' money.

Well, as President Bush and his cronies all sing in unison about how these checks start arriving today to help poor people deal with the very inflation that the checks themselves actually cause, we have to start to "taking the trade". The playbook's been fast-forwarded and we've got a 12% move to call victory on.

You can't go broke taking profits. And I'm gonna have my mom take that 10% back out of the market until the next panic. She's not in any rush and we'll be leaving about 70% of her funds exposed to the world's more volatile markets via a well-diversified approach in mutual funds, real estate and treasuries and more.

As usual, the money trade was simply a matter of "flipping it'. If you bought the panic, you'll now want to sell the relief. Flip it, indeed.