3/29 pre-open

I went into the weekend flat the stock market looking to buy an expected breakout to the upside today (SPX exceeding 1168.75).  Bought 2.5% DDM at 47.91 on ARCA.  Went in with the absolute minimum position short silver 1.5%.  Bought tiny silver futures based on stop being hit.  Will sell ZSL near market open.
The jobs number is estimated at 190K - 200K.  The stock market will be discounting this number all week.  It is higher than any in the past 2 years.  A lot of buzz will surround it Friday and Monday.  No trading Friday. 

So, current economic statistics are looking up!  Unfortunately, to make money in the markets you need to look 6 months down the road.  A look at M3 is a heart-breaker.  The government has been trying to get the money supply to expand and it can't!  This is after 1.6T added to Fed balance sheet and monetary base,  stimulus bills through Congress, bailouts of nefarious institutions along with a few victims,  and nationalizing of financial instutions and car companies.  Look at this M3.  It says it all:

And, lest you think that M3 is not relevant, the history leading into 2008 was a lion's roar right up to the market's top.  The reason that the government cannot get money supply to expand is because the recession has not cleared out the extreme level of debt in the system.  Thus, people will not lend to others without impeccable credit and people will not borrow because they are concerned with getting out from under their extreme level of debt.  So, the only difference between now and pre-2007 is that the government has assumed the role of drunken sailor, instead of it being shared between the private and public sectors.  The points to take home are:

1. 
   
   The stock market discounts FUTURE liquidity, not current liquidity. 
2. 
   
   The spreads in the debt market have shrunk to downright complacency! 
3. 
   
    Rates are going up but are not (yet) affecting spreads and junk is back. 
4. 
   
   Complacency is also apparent in stock market sentiment and this does not bode well for future prices.  

I got some feedback that my statement Friday that I thought that the stock market was built on lies was over the top. I wish to apologize if I offended anyone.  The truth is that our economy and markets offend me.  They offend my moral compass.  Citigroup, Goldman Sachs, Bank of America and others created, fostered, and prospered by the derivative shell game and have been prime beneficiaries of the government bailout.  Goldman Sachs benefited mightily even though it did not receive direct monies, but it's blatant misuse of the public sector as well as cheating financial institutions around the world by use of it's derivative products places it in a unique place amongst the amoral icons of history.  So yes, I am offended by the stock market and the financial system in general, which I believe is still in precarious condition by virtue of all being saved.