Cyprus and Your Bear Market Brain

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The Rude Awakening Monday, March 18, 2013 | 1000 Hours Cyprus and Your Bear Market Brain Can a Cyprus crisis kill market mojo? What’s behind the eurozone choke... Plus: Gold $1,600 is back and running... Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner On Friday, no one cared about Cyprus. This morning, a measly $13 billion bailout for an island nation your honor student can’t even find on a map is holding world markets hostage. Most Asian markets are down more than 2%. European stocks are off a little more than 1%. Stateside, futures have dropped less than 1% this morning. The bailout isn’t the cause for concern — it’s the ridiculous conditions. Out of nowhere, they now want to tax bank deposits. So anyone with cash in a Cyprus bank could lose up to 9.9% of their money. It’s as if Europe is engaged in some sort of defiant act of self-sabotage. The past two years of turmoil, austerity, bickering and riots just haven’t gone on long enough. I guess old habits die hard... The bailout itself doesn’t matter. Europe is already bumbling about with damage control measures and might even back its way right out of this mess. It’s the waiting game that will get tricky. Now that the idea of bank runs throughout Europe has been planted in the heads of investors around the world, we’re quickly seeing renewed distrust in equities popping up all over the place. Here’s what you need to understand: The financial media have been lying to you. The infatuation with new all-time highs has tricked you into believing that we’ve entered some sort of euphoric bull market run that’s destined to flame out in spectacular fashion. Give me a break already... The S&P is up 9% so far in 2012 (2% less than it was this time last year). You heard all of the fanfare about investors dumping a record amount of cash into stocks back in January — and how everyone was way too excited about stocks. But they’re already getting out (to the tune of $1.7 billion pulled out of stocks in just the last two weeks). Sentiment remains fragile. Today’s action is all the proof you need. Everyone’s bawling over a 13-point drop in the S&P this morning, yet futures are only back to where they were on March 8th. I think we can deal with that. The market is overextended after its wild March run-up. Cyprus is the excuse to cool it off. Make no mistake — despite all of the prattling over a market top — our brains are still trapped in the decade of the big, bad bear market. An end to the pain and suffering is in sight. We’re just not there yet. It will take some time to recondition your thinking... So if you think this Cyprus news the big global event destined to slay this market and send us reeling back into a 2008-esque doom spiral, you need to have your head examined. What’s setting up here so far is nothing more than a solid chance to pick up stocks. A healthy pullback this week will eventually offer the buying opportunity you’ve been waiting for. Rude Numbers Targets, Predictions and Wild Guesses $1,605 will buy an ounce of gold this morning. Nothing like a good ole’ fashioned eurozone mess to give gold the boost it needed for a $1,600 run... $15.7 billion of Apple’s massive cash stash will finally get put to use. According to Bloomberg, Apple is rumored to soon raise its quarterly dividend 56% to $4.14 per share. For some perspective... $137.1 billion makes up Apple’s total cash holdings. That’s more than five times the total GDP of Cyprus. $1.29 gets you one euro this morning. The euro dropped about 1% this morning, its biggest decline since Jan. 13. $92.60 buys a barrel of crude today. Oil is off by more than 1% since Friday afternoon. Rude Trends When to Buy... When to Sell I’m still compiling your survey results. I’ll have more detailed commentary for you regarding your market ideas later this week... For today, keep an eye on gold and equities. Gold enjoyed a nice jolt courtesy of the brief eurozone panic, pushing it back out of the danger zone and into $1,600 and counting. This is an important rally off its recent drop near critical support. I’ll keep you updated as it develops... As for stocks, look I’ll watch for a reasonable landing zone for this pullback. As long as the S&P holds the 1,520 area, the 2013 rally remains open for business. [Ed. Note: Send your feedback here: rude@agorafinancial.com... or follow me on Twitter: @GregGuenthner] Ignore At Your Own Peril Today's Must-Read Links Worried Americans Turn to ‘6-3-1 Safety Net’ for Protection Against the Coming Money Crash Ronald Reagan’s Little-Known “Loophole” Tobacco is being resurrected — making it the profit opportunity of the decade. 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