It just gets no respect it seems. Seems like everyone is waiting, watching for the big pullback in the market that just "has to" happen. After all, this rally is "bullshit" right? Bears will say banks are reporting "fake" earnings, the economy is still a mess, commercial real estate is showing cracks, we've been up for 6 straight weeks (unless markets fall apart big today), there's a rising wedge showing in the chart..ect, ect. I agree with a lot of these points, however, the reason why we haven't tanked like everyone has been expecting is because....everyone is expecting it. Instead of fearing it and/or chasing the market like they typcially do after a big rally, most traders it seems keep trying to fade it getting stopped out again and again fueling things even higher. So, ironically they are causing the "bullshit" that they refer to. I'm not trying to mock traders who are getting stopped out like this...I've done this myself in the past. I'm just saying they need to realize that they are the problem and until they start respecting the upside the market will likely keep punishing top tickers. I'm not going to be a smart ass and say that we will never see a big drop until everyone turns bullish. Perhaps the markets dip and all the top tickers quickly convert to buy on the dippers creating a slope of hope for the market to descend further. That could very well happen too.
All I know is that market tops tend to occur when there is evidence of panick buying and when the general consensus feels that a) upside potential is still quite large and/or b) markets are due to pullback but it will be a buying opportunity. A classic example of this thinking was when oil hit $130-140 last year. The consensus expected a pullback to $100 which at that point would be a great buying opportunity.
So, what will it take for the trading community to give this market respect? Like I said the other day, a break of 880 on the SPX should do it. We'll just have to wait and see if it happens...
No comments:
Post a Comment