First off, I believe there are enough indicators giving the green light for a rally here. I wouldn't call it an "all in" buy signal but it's a buy signal nonetheless. Will it be a V bottom or some sort of W bottom whereby we rally and then retest the lows or make a slightly lower low in early February? Who knows? Calling every wiggle is a guessing game. All I know is that bulls have the green light. A rally and then retest or lower low in Feburary would likely usher in the "all in" buy signal.
I've been saying since the spring that this bull run is a Rodney Dangerfield market -it gets no respect and it still hasn't. The host of a popular bearishly biased blog I follow (which will go unnamed); who back in the summer said he was going to make a fortune shorting the market in the fall, now says this
"I will close by stating what I've stated many times during the past few days - - - a push higher by the bulls (which perhaps kicked off during the latter part of Wednesday's post-FOMC trading) would be happily embraced by me. I am watching the major indexes and biggest ETFs for what I consider to be important thresholds, and I will start scaling back into shorts as those levels are approached. I consider the March 2009-January 2010 rally to be permanently broken at this point, and I intend to not only push my commitment to my entire cash on hand, but - - if the stars line up as I hope - - dip, for the first time, into my margin buying power."
He considers the rally to be permanently broken after a 5% dip from its high after a rip roaring 70% move in 10 months? lol! That's quite a bit of arrogance coming from someone who has been on the wrong side of the market most of the way up. The same person who in the summer said he was going to make a fortune with shorts come the fall. Not only is this guy willing to go all in short...he is willing to go all in + margin! People like this need to show some humility. When you've been wrong for months on end in such a big way it's often best to regroup and instead of being bold you should just STFU. Being bold and stubborn like this is a symptom of wounded pride and a lot to today's bears are like him. Pride will be your undoing in this game unless you do like Pretcher and just write newsletters forecasting the end of the world every year (24 and counting) to fish in the unsuspected suckers who are probably miserable with their own lives.
The funny thing about this particular guy I've referenced above is that all throughout the past several months after getting burned time and time again picking tops and shorting bounces he tried to come clean a few times saying he's learned his lesson but he never did. All it took was a little dip for his bearish bias to get the better of him.... like a crack addict who can't kick the habit. I'm waiting for enough guys like this to throw in the towel and swear never to touch the short side again....and actually mean it. That's when the 2nd or 3rd phase of the bull market will be underway.
Again, like I said before....bulls are running scared while bears are getting very bold after just a routine 5% dip which is quite common in bull markets especially one that has made a 70% move in 10 months! This is a recipe for an upward surge to new highs.
Maybe I sound a bit arrogant myself here but I don't mean to. If the market rolls over into a decisive downtrend and breaks 975 or thereabouts I would likely admit that the bear has indeed taken back control of this market. Here's the thing....if the bears are right and we are going to retest or break the March lows then there will be plenty of time and money to be made on the short side on the way down from here. Why not wait until the market has clearly rolled over before going short? Who gives a fuck if you miss the first 10-20% of the move down? Think about if you missed the first 20% of this bull market and then hopped on. You still would have done very well for yourself and in a rather painless, instantly gratifying way with the wind at your back.
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