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Takeaway: Did the permabulls nail this? Utilities are up 11.3% (on U.S. growth slowing) and Financials (a rate hike proxy) are down -5.6% this year.

A Review Of Recent "Rallies" and What's Really Been Working - bull riding cartoon 08.26.2015

Most bears are positioned bullish now - and the underwater bulls, well, they're always bullish.

"After 2-3 weeks of being royally squeezed, I’m doubling down on everything we’ve been saying for 8 months," Hedgeye CEO Keith McCullough wrote this morning in a note to subscribers. McCullough continues: 

"Everything we’ve been saying” includes not being long small caps and/or junk bonds – Russell 2000 only +0.5% last week (yes, I can take a lot more pain than that) to -4.3% YTD and -16.1% since we went broadly bearish on US stock market beta in July."

Permabulls can call recent bounces from the 2016 lows whatever they like. But ask them to pull the chart back a bit further and explain this uncomfortable reality.  

Another point. Investors have expressed their lack of conviction in stock rallies all year. On up days, volume is either flat or declining. That's not exactly bullish. 

To be sure, there have been some clear winners and losers in 2016. Take a look at our favorite Long/Short sectors. Long Utilities (XLU), a U.S. growth slowing proxy, is up 11.25% this year. Meanwhile, our short Financials (XLF) call, for rate hike skeptics, has also worked out nicely, down -5.6%. Neither of those are consensus or fits any bullish narrative.

Here's the chart:

A Review Of Recent "Rallies" and What's Really Been Working - year to date sectors

We also like Long Bonds (TLT), up 5.6% year-to-date.

"With the 10yr +10bps last week to 1.98%, now it’s go time (again) for the Long Bond and Utilities (XLU) bulls who are having a great year vs. “Long Financials During Rate Hike Cycle” view  (XLU +11.3% YTD vs XLF -5.6%); is the Fed going to be hawkish this week? I think so – but so does everyone else; I think rates and Financials drop on the “news” like they did post rate hike."

Don't believe all the storytelling.