but not bearish:

“I think it is a mistake to get too bearish right here. Cautious yes, but bearish no! I am talking to a lot of PMs here in Europe and they are WAY under-benchmarked to stocks (especially to the U.S.). They are close to being forced by their bosses to rebalance to at least a 60% stocks / 40% bonds weighting. Further, the bulk of the economic stimulus monies (TALF, PPIP, etc.) is going to ‘hit’ between June and September. That could make the economic numbers look much better than most expect and cause businesses to restock inventories, buy equipment and actually hire some folks. The result could also compress credit spreads, which will allow corporations / individuals to ‘roll’ their debt. Not just long-term debt, mind you, but lines of short-term credit, working capital debt, etc. Whether this turns out to be a rally in an ongoing bear market, or a new bull market, remains to be seen; but, if stocks don’t correct soon I think you will see another leg to the upside that will be larger than most expect despite my cautious stance for the past month.”

I still like a short trade here as the banks and the S&P test their 200 day moving averages.  A rally into early June would not be shocking as oil is seasonally strong and Hong Kong could remain bolstered by the arbitrage trade, but if we see the banks fail at their 200 day and roll over you can be nearly certain that the rest of the market will follow them down.