I still have the notes I took from a meeting I had with Jim Cramer back in September 2002…

Oh, so there are some days when the markets don’t just drip steadily lower all day.  I’d almost forgotten what it was like to see the blinking lights in green and not red after six straight down days coming on top of five straight down weeks.

I’m starting to think we’re really primed for a 5-10% move higher in the near-term in these markets.  There’s a whole lot of firepower out there in the form of sidelined longs/bulls and aggressive shorts/bears.

I’ve been chatting with a lot of money managers this week — aggressive tech mutual fund managers, even more aggressive hedge fund traders, retired investment brokers, and more.   Less than one in ten is outright bullish about the markets and stocks and the economy right now.  Less than one in ten is fully invested — even the mutual fund managers I know are carrying as much cash as they can get away with as called for in their charters.   About half of the professionals I’ve been talking to are actively shorting tech like Apple, Microsoft and Netflix.  It’s a bubble, didn’t you know?   At least it is this month, apparently, if you just ask the peeps running the “smart money”.

Alas, just a couple months ago, when the markets were in rally mode and tech stocks were hitting new highs daily there were all sure Cisco’s less than blowout fundamentals of late were simply a symptom of old school tech, more than half of these same guys were long and trying to figure out how to get more alpha faster.  Alpha, btw, simply means the risk-adjusted return on their capital.

But as the pain of holding tech longs has increased overproportionally with the days and days upon weeks and weeks of a slow drip lower in the broader markets, the stock prices have begun to drive their analysis — ask ’em and they’ll tell you that the long fade in tech stocks is “telling” us that the fundamentals have turned south and that the end is nigh.

“Didn’t you see Texas Instruments last night, Cody?  How can you be bullish on tech when one of the biggest semi companies in the world is telling Wall Street that business is tanking?!”

I told them back that I wasn’t changing my thesis that smartphones/tablets/clouds/apps will grow exponentially in the next five years because a company that sells to Nokia which is going to sell hundreds of millions fewer gadgets this year than they did last year told Wall Street’s analysts that they hadn’t fully accounted for that collapse of their big customer for the next three months?

Look, from a trading perspective the biggest theat to being aggressively long right here at DJIA 12k is simply the forces of seasonality.  June sucks for stocks, historically and it has so far this year too.  It’s rare that I even factor seasonality into my trading analysis at all, but the “Sell in May and go away” theory has empirically played out with such frequency that it does give me pause.  But that doesn’t mean we can’t have a big intra-month rally as the bears and shorts have gotten ever more aggressive and are now in the position of having to scramble and cover providing fuel to the upside if and when any kind of sustainable rally comes.  And of course, the underinvested professional money manager bulls will have to join any scramble as they’ll feel naked once any rally starts without them.

In addition to having spent the last few months and years preparing for this techstock-boom-to-bubble that is now playing out according to plan, I’ve been getting more aggressive the last  couple weeks about buying and I do plan to continue buying both common stock and figuring out new option strategies to maximize our potential profits on any near-term rally.

Before I finish up this post, let me remind you that unless you’re an aggressive trader and can handle big pain in the event I’m dead wrong about a coming near-term rally, then don’t worry about any of this.  Intermediate- and longer-term investors can just use this weakness to nibble on some common stock in the very best tech names, many of which I’ve bought for my own portfolio here in front of you guys in the last three months.

I still have the notes I took from a meeting I had with Jim Cramer back in September 2002, just weeks before I was to launch my tech hedge fund at what turned out to be 11 days before the Nasdaq finished putting in a bottom from its long 75% decline from its 2000 top.    One bit of advice I wrote down from that meeting was:

Bet big when the odds are in your favor, bet smaller when you’re less convinced, and don’t bet at all if you’re not sure.

Love or hate Jim, there’s some great wisdom in that quote (and, just to keep it real with you, despite having had may disagreements with Jim over the years including some hard times with Jim as I took my job as an anchor on Fox, the fact that Jim took a meeting with an at-the-time 29 year-old cowboy from NM who was trying to launch a tech hedge fund in the greatest tech stock market collapse of all time is hard to hate).  I think the odds are increasingly in the tech bulls’ favor here in this second trading week of June 2011, so I’m starting to bet bigger.

I don’t have any magic bullet or secret formula to game such near-term market action, but I do have fifteen years of eighty hour work weeks navigating these types of moves in public.   Let’s keep rockin’.