The number of stocks above their 200 day moving average and the amount above their 200 day moving average is breathtaking. The rise has been relentless. But what baffles me is that I would expect there to be fewer cries for a correction in the face of 5 months of relentless upside. The market really isn't overvalued here, if you think back to where we were 2 years ago. Yet everyone is looking for that elusive 5-10% correction. I think its very dangerous to try to short this thing, even though it looks like we've overshot to the upside. Strong markets stay stronger than most people expect. The stronger, the longer they last. I expect this thing will go higher over the coming months and will top out in early 2010. Until year end, dips must be bought because I don't see a meaningful correction anytime soon. There is just not enough enthusiasm for this rally for it to die out yet. Don't confuse the weak economy with the stock market. They are two different animals that operate on their own time scales and you can't say that the market should go down because the economy is bad. That is a straight road to the poorhouse.
Earnings is far more important than where we were two years ago. The earnings story is going to be interesting in the next couple of quarters...
I must admit, I keep thinking we are due a drop, but im only a learner. I've recently been lurking in the ES journal on this site to see what the real traders are doing, and most of them seem to be expecting this thing to just keep on rallying, So maybe the people expecting a retracement are just the amateurs like me! Im still trying to learn how to daytrade the ES and have started my own journal, but at some point im gonna look into a system that only goes long and averages in on dips. From what the real traders tell me, the ES overtime is guaranteed to keep going higher and higher. manipulating prices i guess, but i want to be on their side, not against them.
When everyone has their party hats on and is celebrating the return of the bull market, it will be time to go short for a big move to the downside. Keep waiting for that.
Look at AIG! What the hell is going on with THAT stock? Is it suddenly all better now that we've given it 150 billion?
It's all manipulated. This recent 5 month rally is yet more proof that people who trade off of fundamentals generally don't have a clue what they're doing. Anyone with brains only trusts the chart, and that's it. The market will go up as long as the chart and price action says it will go up, and then it won't. The fundamentals are completely irrelevant to making money, even if it is interesting to keep track of them to see when things are getting out of whack with reality. This is just one of those times. 1999 wasn't that long ago, most people should remember what those days were like.... that stuff was even more ridiculous.
I posted in another thread, AIG had a 20:1 reverse split a while back, so any time a breakout occurs there are very limited shares available for buying and short covering and the demand drives the price crazy. Think about it, if you're long AIG are you going sell it? Heck, no it keeps going up after every consolidation. So if no one wants to sell, but people want to buy and the shorts want to cover, it's a game of "catch me if you can" put on by the longs. It doesn't matter what the intrinsic value of a stock is, only what people are willing to pay to get in or out of their position. Right now anyone short AIG prior to this morning probably wants to get out
I guess. It's just hard to imagine that kind of run with AIG when the company is such a turd. Someone is going to get their ass handed to them eventually on this one.
I think AIG released a statement a couple of days ago saying they would be able to pay back taxpayers for the money given to them which caused a big rally in the stock. I could be wrong, but I'm pretty sure I heard something about this.