At the end of last year during the inexorable rise, there were several threads a night about a screaming top. Bets were made, long-standing members even put their ET membership on the line. Short interest at lows. What happens when everyone gets long?
There have always been bear markets or panics/crashes. No one who has any market knowledge says "never".
I'd love to maintain my bearishness, and long term IM NOTHING BUT BEARISH based upon all of the economic data and conditions we find ourselves with. However, the best rule I ever "came up with" was on a wine soaked evening talking on the phone with Bo Yoder when one of us uttered "that which should go down better darned well go down". Tends to be that when the news is very bearish yet the market reaction remains bullish, its not your wisest bet short to intermediate term to bet against the market action. The good news is that as short term traders who probably all have less than say $100 million or so to work with we can all be very nimble and get out quickly when things do go to hell, and even get short which will pay off in a big way down the line. But for now, at least over the course of the last several weeks "that which should go down" has not and its been a great trade to stay long. (which can be noted as a shift in my stance since about a month or so ago, during which time I've made back my losses and gotten back to respectability for the year by following my rules). Again, this is not to say being bullish and remaining so (like Mr "I'm long and strong forever with no stops" ) is a good bet (and thats all that is, a (probably) bad bet). Right now though the markets take a licken and keep on ticken, and in a fight thats not the guy you bet against. Stay nimble as hell though.
Market volatility is likely to do what it's always done, move around alot but ultimatly revert to its long term averages.
For all the hemming and hawing the dow is only 1000 points below August 16th levels. The only silver lining (for me) is that my stocks picks this year did really well.