Inching even closer to the top but still not there yet.

Markets gapped down on GM bankruptcy rumblings...this IMO was a weak excuse for a dip. Everyone knows GM is toast. Their stock says it and their bonds says it. Goldman Sachs has been on a tear comming into their earnings which blew past estimates. To be honest, most people expected this, even the bears and so there was a bit of a sell on the news reaction after hours.

Financials were very strong today and more damage was done to the bears who continue to try and top tick that sector with futility. I've been picking on FAZ and SRS bottom fishers for a while and today on the FAZ yahoo message board I continue to see confessions of how much money some people have lost. Some of these clowns actually went on margin to buy FAZ. They deserved to lose their money for being so reckless and foolish.

I'm noticing more bruised bears pulling in their horns (or should I say claws) giving up on trying to top pick the rally conceiding that it could be several months before the bear comes back. Ironically, this sort of behavior is what you see near tops. For a top to occur most people have to be afraid of trying to pick it. Same things occurs at the bottom. Another thing you tend to see near tops is when options players are aggresivily buying calls in the face of market weakness like today and getting away with it. The equity put/call ratio was a rock bottom level of 0.50. I remember in early May last year the same thing occured and the top was put in about 1-2 weeks later. But despite these warning signs of a top the following tends to also occur which hasn't happened yet:

a) a spike in bond yields b) at least a 1 week spike in bullishess from sentiment survey's c) investor's pouring money back into equity mutual funds d) bearish "market action" as I like to call it. Gap down days like today is bullish market action because it indicates a "wall of worry" tone to the market.


Market weakness or choppiness tommorow would not suprise me but again, I'm not concerned about the daily minutia. My insticts still say that even if we see weakness in the comming days, ultimately we will see another move to the upside from current levels before this rally is over. That move will very likely be the final phase of the rally.