Think the bottom may be in but I am leaning short now. This up move feels like it is running out of the "not so bad" news that has been fueling it. It's interesting that the rally off lows in October 2002 gave roughly 90% of those gains back in the 4-5 months that followed before taking off in March 2003.
It is only the biggest rally in 75 years because it has been the most horrific collapse in a very long time. There is a diff between riding the wave and a bear market/sucker's rally. I suspect at least one or more huge drops. The job losses are only getting bigger each month. But I agree, trade what you see. But the partying at a big rally is the wrong thing to do. Trade with a huge amount of fright. The dangers are awful.
Good post. I expect punishing fakeouts each way as sentiment gets overloaded. We're segueing from too many shorts looking for the end of the world into too many longs thinking these are generational buys. I'd remind everyone to not expect the expected. What if in April or May you get a GREAT payroll number? It doesn't mean the job situation is doing better macro but in the micro there's always a chance of getting 2 or 3 months of improving data. The market's expectations are low. Look how housing numbers have jammed the market higher a few times lately even though the numbers in isolation still suck. The bar is so low than anything showing better than a 1932 economy can spark buyers. OTOH I think we're close to a tradable ST high but I have zero idea if resistance perma holds. Some of those 70's rallies were sick and this could be the 70's. Or it could be the end of the world......
obviously no one can say the market has not go up. The biggest RALLY is where I personally disagree. A rally to me is where the market moves up with increased volume. Each wk of the last 4 wks we have ended with less volume according to bloomberg. The volume in nq, es, er has outside of the initially gap channelled or meandered long in a few point channel. It has been acknowledged that the short interest in companies has been deleted and that the move up has indeed been a short squeeze and margin call. I would not be surprised shortly to wake up to a limit lock down. the banks and gov't. have an agenda. nq is now retraced all of the drop since obama. yes up but longs need to take profit regardless if it continues to run or buy otm puts or sell calls for protection. good luck to both longs and shorts w
Stocks became absurdly cheap. Managers were also getting antsy about being on the sidelines. Lots of people are calling a bottom for the second half of '09 so SPX 1000 seems entirely reasonable to me, unless/until it becomes clear that this optimism is unfounded. To go lower the market will need to see some evidence that earnings/divs will continue to fall going forward, requiring further discounting of shares. The market clearly got ahead of itself in late Feb-March. I moved a decent chunk of my "investment" accounts into stocks around SPX 730-740. Maybe I'll lighten up if we rocket straight to 1000 but otherwise I'm holding long and strong, and looking to add if we revisit the lows. The world isn't going to end and some valuations really did become extremely depressed.