This post nails it. I could quibble about a few things -- "insane" is in the eye of the beholder, and a period of time short of "forever" can last a lot longer than common sense might lead one to believe -- but, all-in-all, it leaves nothing more to be said, IMHO.
You can call this reaction since March an investor bailout after The Flush. This is no more than a recover rally and a point will come in where those that are underwater from long term positions who got stuck in it, will cash out to lessen their loss or get their accounts to even. Those souls who are clinging onto their positions that are underwater will be driven by hope. But we all know nothing of much has changed since Obama has taken office. Whats needed now is a flush to retest the confidence in the market. A good healthy correction to establish the lower trading range for the next few years. But I don't see this happening anytime soon. There is a difference between long term capital gains and short term you know...
Plenty of Bears who couldn't trade their way out of a paper-bag because they continue to read into the economic fundamental "backdrop" (and believe that there should be a strong correlation between the equity market and the economy) instead of technical price action have been absolutely SLAUGHTERED this year! For example, Bob Prechter has been short since August 5th around SPX 1000. He added to his 50% short position about 35 points later. On that position alone, he's down 11% and his followers have suffered through 5 straight options expirations and a couple of futures rolls. The guy then averages down once again and recommends going 200% short last month and 30 handles ago. If you have read any of the "Gloom & Doom" blogs on the Internet ( as well as the rambling and ridiculous postings by ET's very own S2007S ) you could have made a fortunte using them as a CONTRARY indicator ALL YEAR LONG! Excess liquidity and price action RULES ALL. People that have consistently "fought" this rally are newbies that just don't understand what makes a market tick, let alone have no clue how to confirm and identify price trends via T/A.
I don't think that's true. This has been an extraordinary market environment by any measure, and many of the bulls riding this trend have been as clueless about market forces as those bears fighting it.
Exactly. The market doesn't care about anything, fundamental or technical. It's all about free Fed money from Banana Ben and lil' Timmy!
S2007 is my favorite poster. I look forward to his doom and gloom pickings and occasionally try to outdo him, which I know is impossible. Look, what you're missing is that there are some more sophisticated ways to play the bear angle than shorting and long put options. I won't spell it all out but to say you can accumulate assets that are cheap now and will be of value later when this bubble pops. As for Prechter, I have no respect for oracles like that. I'm not here making specific calls, nor is S2007, I am just saying a bubble is in the works, and there are those who have different risk profiles, trader on MUCH longer horizons than most of the people here at ET, and prefer to use macro fundamentals as the basis for putting on their positions. So not every bear is broke. That's all I'm saying.
It is good news for a trader when "a bubble is in the works". If, as I think most of us can agree, markets have a strong tendency to overshoot at both extremes you want to be long bubbles (particularly if they are already in the works) and short busts (particularly when they are already in the works). If anyone in this thread thinks that picking tops and bottoms is a good idea and that worrying about "over" and "under" valuations has a value then you need to go hang yourself TODAY. If you think like that you will live the rest of your trading existence (I won't call it a life) in total agony. Put yourself out of your misery. Pull the plug NOW!
Just because someone isn't long doesn't make them a bear. Remember when the market was going down last year? It was relentless, day after day..no support. I had more than one friend tell me they just wanted out....stop the pain. A lot of people sold, that's how you get that spike down to 6000ish on the dow from 14,000. Now those people are on the outside looking in. And everyday more of them decide to buy. This bull run is far from over.
arnie you need to study history. history shows were now around 30% above the next greatest run in us stock mkt history off a bear mkt bottom without a 10% plus pullback. YOUR ALSO IGNORING ONCE IN A LIFETIME PARABOLIC STK CHARTS WITH NO PULLBACKS. we won't even talk about 10% unemployment or tons of other terrible econ #'s. the problem is people refuse to believe things have changed and they won't be returning to the way they were.2010 will be the start of the next leg down that will define the next 10-20 years of another japan type mkt of being down 50-70% off the 2007 highs and being in a defined range for a long long time as our massive debt chokes all econ growth.