and why it is more likely to call bottoms. If everybody is bearish, the market may not rally sharply, but it very likely won't go down more than it has already in the near-term (unless there is an outlier event like a financial meltdown, that has to be discounted) Traditionally one would expect that if everybody is bullish then prices will go down because everybody has bought. This clearly hasn't been the case. If I start out bullish with 10k, I totally overleverage (this is a bad idea but just for the sake of example) and buy 100k worth of S&P futures and I keep my leverage at 1:10. If the market rallies 10% and I want to keep my leverage the same relative to my account size I'll own 200k (I'm not selling obviously because I am still bullish like 90% of the people out there). There is absolutely no problem with this strategy in a trending market and it will make you rich very fast if you cash out in time. Most likely, people are far more likely to pyramid into a long position than they are to pyramid into a short position (however if participants would be equally inclined to, this would obviously have tremendous downward impact on the market because your position size compared to market cap will grow much faster than when pyramiding into a long position). And as long as there is no real downside to the market, there is no reason to stop buying dips. It has continued to work and those who were betting long will continue to have even more money at every new dip to buy it up. This is probably how upside trends get created. It has little to do with economic fundamentals. Anyway, markets are "designed to go up" (except in Japan) so why you would want to pyramid into a short position is quite obvious. Anyone else have a theory on why the market can sustain blind/irrational bullishness for much longer (time-wise, price-wise the market can overshoot by as much on both ends) than irrational bearishness?