Sunday, October 15, 2006

Tilting At Windmills

Notice how many bears are shaking their fist at this market? Notice how many bulls are expecting a selloff? (They think a haircut would be healthy, setting the stage for a strong 4th quarter rally: the proverbial pause that refreshes.)

Among the bears, a lot of smart folks think this move is nothing more than a "head fake", or "sucker's bet", fueled by a "short squeeze".

If you peruse the following charts you'll notice they all have something in common: a weak opening followed by a strong finish. With the exception of last Wednesday (when the media went nuts over a plane flying into a NY highrise), this market has absorbed the initial wave of selling and then continued its march higher.

If this is a headfake or short squeeze we'll get a hint of trouble to come once we see that pattern reversed: exhuberant buying at the open followed by distribution.

Maybe then we'll begin to see the bulls shaking their hoof at the market.


Anonymous Anonymous said...

These are very good points ........
on certain Perma-Bear blogs , not only do you see no objective introspection on why they've missed 1400 Dow points in 8 weeks , but if a Bull has the " gall " to espouse his point of view , he gets " punched and kicked " , until he's no longer comfortable in making future contributive points ... many times the Bulls are banned ..... I am amused how the Bears find every "cloud" to confirm their sentiment , and constantly overlook the positives ...... in spite of this , I enjoy reading the opinion on these Bearish blogs , and also the Bearish fawning and end-of-the-world commentary , since sentiment -- good or bad -- has always been a key to my taking the other side of "their" trade

2:17 PM  

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