Based upon the celebration I saw from the armchair bears yesterday, I would have been made to believe that the market had tanked 15%. I've even noticed some of these same bears who have been getting their teeth kicked in for months say that they hope the market gets to new highs so that they can short some more and make "a fortune" in the comming crash this fall. Such bravado and arorgance after being humiliated is never a good sign for these bears. This is the equivalent of a boxer who has been getting the crap beaten out of him taunting his opponent after landing a jab.
Yesterday's drop has already nipped the signs of froth I've been noticing. The VIX popped 15%, the NASDAQ/NYSE volume ratio tanked (although not to the opposite extreme), rydex traders are retreating back to money market funds and like I mentioned, bears are getting quite cocky after only what....a 2% drop? I noted this type of behavior before over the past few months and it wasn't too long before Mr. Market sent these jokers with their tails between their legs.
We're seeing a bounce today which so far looks OK but I believe we will be in a consolidation phase for a few weeks before going higher. I'm quite sure within these weeks there will be a downside scare similar to the failed H&S pattern. I expect the action to be a bit whippy for a few days.
Bottom line: so far this drop looks more like a correction than the begining of new bear downleg even if the market eventually works lower.
Hi, how are you. CFA results are out.
ReplyDeleteA lot of chest thumping from the bears... but not a lot of follow through.
ReplyDelete