Babak, Please don't forget that this big first-half 2003 rally was anticipated by Didier Sornette and his anti-bubble model. In fact, his market prediction still looks good so far.
First to shatter a myth. A well known phrase on Wall Street says "Never sell a dull market." It is often cited by bulls as a warning that the market is about to resume its upward ways. This is a misunderstood statement from none other than the father of technical analysis, Charles Dow. In actuality, he said that dullness simply means that the primary trend is about to reassert itself. According to Dow, "dullness in a bull market is followed by advances and in a bear market by declines." There is no doubt that we have just witnessed some rather listless trading. So the question is, are we in a bear market or a bull market? My answer would be a bear market. Actually one mother of a bear market which is just getting warmed up in its pursuit of annihilating the stock market and sending young whipper snappers into a corner to cower in a fetal position and search for their "happy place". Over the weekend I read "Bear Market Investing Strategies" by Harry Schultz (published 2002). This is a thin book chock full of wisdom which I would recommend to all serious traders. It is a great comprehensive book that walks novices through what a bear market is and how one can survive and thrive when it plays out. One of the sections of the book deals with 'secondary reactions' which is the old school way of talking about counter trend rallies. I can not stress how important this topic is (especially, as we are in one hell of one right now). Anyway, in the book Uncle Harry quotes from Robert Rhea talking about secondary reactions in 1930 (if you don't know who Mr. Rhea is, I feel sorry for you): Rhea then goes on to cite that in his experience the following is true: 7% of "secondary reactions" terminate after retracing 40-55% 27% of "secondary reactions" terminate after retracing 55-70% 8% of "secondary reactions" terminate after retracing 70-80% 14% of "secondary reactions" terminate after retracing 85%+ Now, mind you this was written in 1930 and relied on (probably) data from the mid/late 1800's to that time. However, something tells me that the market hasn't changed that much to nullify the basic wisdom that Rhea is imparting. Speaking of "services" being extremely bullish. The II was 54.4% bullish and 19.8% bearish. As well AAII was 62.8% bullish and 16.3% bearish. Hmmm..... TrimTabs is making bearish rumblings. Insiders are boarding the lifeboats while market strategists play a sonata. The VIX/VXN are going lower and lower. The rally is running on fumes as volume recedes rather than marching shoulder to shoulder with price. Indicators which have been faithful gauges before are now spinning around in their little glass cases. Summation is at an all time high, stocks above long term MA are high, BP% are high, etc... So how am I playing this? Well, the transport bearish call is beginning to bear fruit. I've gotten stopped out of some (BNI, CSX etc.) but others are turning (HTLD YELL EXPD and JBHT are simply beautiful). The $TRAN has put in a double top formation. If the transports turn, it will have a real effect on the market and the industrials as this sector has been white hot (I believe I mentioned this before). The bond ETFs are jumping like crazy! Especially the long term LQD and TLT. I'm out of gold shares as I mentioned I would be trying to be. I think they will either pause in this area of resistence/congestion for a while to catch their breath. Or actually decline. Wouldn't that be lovely? I mean that is what a bull market is built on, flushing the weak hands before a new upswing. I must say that I was elated to hear about Anglo wooing Ashanti. That is a great long term sign IMO. As well China has legalized gold ownership! I will probably short the QQQ, DIA and other indices this coming week as I believe that we will be looking back at these levels in 1-2 months with our chins high, not tucked in. Not betting the farm, just probing for a possible inflection point. And one last thing, one of the reasons why I started this journal was because I wanted to test myself to see how I withstood other people's opinions. Whether it would affect me, change my opinions or convictions. So, I hope you won't be offended if I tell you that I simply don't really care what you think. Sure, I value your comments and read them, but please know that I will continue to trade as I see fit and try to not be effected by what you or anyone else thinks.
Good for you Babak, stick with the bears you'll be right eventually. As I dont want you feeling sorry for me, please tell me who Robert Rhea was..........Thx
As is the case with any business, failure is much more likely to be avoided if one learns his business than if he doesn't bother.
Why not take the first step toward self-education and look it up, since you apparently haven't looked at Dunnigan, Sperandeo, or Edwards and Magee either?
Babak and anyone else with an opinion, interested in hearing how much added demand (if any) the GLD etf will provide for the precious metal