This Is A Suckers Rally

Designed to fool the naive. Starts with the fraudulant claim that Citigroup is going to make a profit and then a tiny improvement in retail sales.

With the retail sales, lets face it it couldnt get any worse and it was Christmas.

As far as Citigroup is concerned (and for that matter BOA) someone should go to jail for that annoucement. A lot of honest investors are sure to lose their hard earned cash.

 

Honest investors almost always lose their money.

Same game, different century.

 

How long do you think this will last?

 

This rally was inevitable. I mean to be honest.... Last weekend we had a plethora of news and uncertainty, not to mention 12 year lows.... How much worse could it have gotten given the situation? Who know;s...but it didn't..... We will be hitting some resistance soon, and in my opinion will one day will retest those lows. The economy is still in need of help, houses are still over priced, inflation will be an issue, ect. the list goes on....

 

It probably is a shorting rally, but not yet. The last suckers ralley lasted form Nov 20th to Jan 5th? This will go atleast 2-3 weeks and could go for 8-10. I concur with everyone else that there's no way this is the absolute bottom.

 

The best shorting opportunities have come and gone. The risk reward down here isn’t so hot for new shorts. I’m market neutral.

 

Vix up friday, mkt up friday. That tends to be a sign of an imminent reversal day (down in this case). Barring any major news this weekend, this vix divergence should play out for a down day monday.

 

Watch the news cycle, not just the technicals! If you recall, Bush/Paulson would cause major short cover rallies with announcements about backstopping the financial systems etc. They would then sustain the rally for a couple weeks longer by controlling the news cycle with further announcements and events. My guess is that Obama is now taking a page out of the Bush/Paulson playbook. You will be hearing more and more about M2M, the Uptick Rule and finally details of Geitner’s plan causing all the pundits to become temporarily more optimistic. Following an extremely oversold market, there’s a very real possibility that we could have a genuine ‘Melt Up’ as the Shorts are forced to keep covering as new money feels more comfortable buying on the dips.

This market is absolutely going lower, but don’t make risky bets based on the technicals alone. Wait for the news cycle to exhaust itself as well!

 

That isn't necessarily true. The VIX going up in the beginning of a rally could be a sign of a significant move up. The VIX is just implied volatility. Under most normal circumstances, a high VIX is a sign of a lot of put buying. But when you are just starting a new rally in a very depressed market, it could be a sign of call buyers coming in large numbers thus driving up the VIX.

 

Well, i will be watching the Fib retracement levels off the recent early Jan high. Looks like the 62% will be at around DOW 8100....if she busts through that, i might be more of a believer that we could be looking at an extended move up.

Otherwise, i'll try to catch the reversal early.