Jared's Market Commentary - Tech IPO Valuations Out of Control

By Jared Rosenbaum “Don't mess with the bull young man, you'll get the horns.” – Principal Vernon So in terms of being wrong, I would say this week (through Thursday) is up there with my all-time worst calls ever (have you figured out yet that betting against me is a sure way to make money?!). As we started to peek over the cliff, the market somehow managed to put together 4 straight days of massive gains. This is actually a great example of why I almost never hold positions into the weekend, and for that matter, overnight. Things have a way of changing so quickly these days, you have to be ready to adjust. I started off on Monday morning ready to short the market…even at 9:25 I was eyeing certain puts and was ready to pull the trigger. I watched the market open and within 30 minutes, I knew there was no way I could short…but I also wasn't ready to go long. It wasn't until early-afternoon that I realized this thing was serious about going upwards, so I started jumping in…and out…way too early! For 3 days I actually did make a little money on the long side, but nothing near what I would have made had I just closed my eyes and let it run (I also did no trading on Thursday). Of course, given my negative outlook on things, there was no way I was holding anything more than 30 minutes…actually, my longest trade was just over an hour and a half. So now that everybody is giddy and feeling good again, I will simply state that I am holding on to my bearish view in the near term and fully expect that coming out of the holiday weekend and into the jobs report, this market will wobble. With the S&P around 1320, I think the best we can hope for is 1370 on the upside. I don't think we get there, but I also never thought we'd be over 1300 right now. Still, I see 1250 in this market very soon...but admit I have no idea how we get there. It will definitely take a major surprise, such as a horrific jobs report, or maybe it won't happen until we DON'T raise the debt limit in a month. The other thing that makes me nervous about shorting is something that I read mid-week, “the market will keep going higher because nobody expects that it will.” The contrarian in me does agree that if everybody is looking for a pullback and/or total collapse, we're likely to never see it. One final area I wanted to mention, that also makes me think we're near a top for a while, is this whole ridiculousness surrounding the dotcom IPO frenzy that is taking place. Linkedin

has come all the way back to $90, Pandora

shot up and is still way overpriced, Groupon, Zynga, Homeaway…seriously, www.homeaway.com is doing a $170 million IPO!? Facebook also received an investment that valued the firm at $70 billion…yes, $70 billion so you can poke people. Maybe I'm just becoming an “old person” when it comes to technology, but I seriously don't understand the valuations of these companies. So I am off to go pull the bull's horns out of my, uh, ear, and I'm going to finish this bowl of crow while I'm at it. In the meantime, I hope everybody has a good 4th and I hope to see some great fireworks in the market next week.