Dancing Bears

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The bears went on parade between 2:30 p.m. and 4:00 p.m. today. They were ecstatic. They felt uncaged and fancy-free. Their excitement stemmed from two hopeful (for the bears) developments. One is that they believe we might see an ugly consumer price index number tomorrow. I don't think that's in the cards, but I could see why they might want to press their bets on that.

The other, though, is a nightmarish fact for those who make a living playing the short side. They know that, for the next two weeks -- two weeks when stocks might have to be sold just to pay tax bills -- the Fed is on the sidelines. For three weeks there had been rumors that the Fed would move intra-quarter before the March 20 meeting and that kept the bears from rampaging. But we got nothing. Then the bears were concerned for a 75 basis point move. They, again, got nothing.

And now the Fed is not about to do anything for at least a couple of weeks. There won't be any phony rumors of a Fed intervention between now and the end of the quarter. The bulls, the bears say, now have nothing. They don't have earnings, they don't have the Fed and they don't have a massive inflow of funds coming in.

"We can unload on the bulls with impunity now," one told me at the end of the day. "The bulls will be stuck with massive redemptions between now and the end of the month." I think that's too harsh a view. I think the bears could overreach. But the horror stories I am hearing from mutual funds have to be encouraging the bears who hear them, too. I will give the bears this, though. While I remain confident that the Fed will take the rates down to 3.5% -- I was the only one saying that three months ago - and that will cause cash to come in and prices to reverse, until then the bears will not let this market lift meaningfully, if at all.