I was going to talk about gold but I had to comment on today's action. Yet another fresh 52 week high today taking out SPX 1200. I think a lot of bear blood was spilled today. All those remaining clowns I was talking about who got caught shorting at 1100 about a month ago probably got wiped out today. The market has now fully retraced the entire panic selloff that began in mid September 2008. Back in January I speculated that an IT top could be made somewhere between 1150-1200 because this was range where Lehman Bros. collapse began. Well, we have now marginally exceeded this target range. A lot of people are saying we’ve come too far too fast. My answer to that is what goes around comes around. How come nobody ever mentions that the SPX dropped about 30% in 10 days in the fall of 2008? And yet it STILL dropped another 25% before reaching a final bottom!
Today there was an off the charts extremely low put/ratio. I’m sure option expiration this week is playing a factor; however, a low number is a low number and this signals extreme greed. The 10DMA of the total put/call ratio is now very low and suggests and IT top is imminent but again, as I stressed before many times, you don't step in front of a market that has just made a fresh 52 week high. If you want to take some longs off the table that's fine, but if you want to short you're asking for trouble. Tomorrow I will be very curious to see what AAII sentiment is. I'm looking for at least a 2:1 ratio of bulls vs. bears to confirm an imminent IT top signal.
But despite the prospect of a IT top, it amazes me how every time the market makes a new high I continue see anger instead celebration from the retail ilk. This tells me your typical retail ilk is still shorting rallies instead of buying dips. It's fucking unbelievable how a now 80% gain in market since the lows 13 months ago is so hated. It has to do with the group think about how this bull market is the result government manipulation, fed money printing, GS propping, ect. People are still very bitter, angry in denial and clueless about the market. One guy on the boards asked "What exaclty has improved?". Numbskulls like this are fodder for the sharks. A lot of people feel just like him and that folks tells me this market has a long way to go before it's done going up. It will continue to humiliate the masses until it earns there respect.
I'm also waiting to see if we will ever get a mea culpa out of Pretcher, Hussman, Kass, Roubini or any of the other bears who have been nothing but horribly wrong about the market for so long. Look, everyone get's it wrong at times but what really pisses me off is when such people ever refuse to admit it and defer to the "I'm not wrong just early" excuse. I think these "gurus" do such things because they think that to admit being wrong is to show weakness. At least Cramer will admit when he fucks up (most of the time).
People are also learning a lesson the hard way that just because some guru made a great call calling a major top or bottom doesn't mean he/she can't get wrong big time later on. Many people for example worshiped Kass with his bottom call in March but he turned bearish in the 950's and then all in bearish around 1030. I bet against Kass...and won. Me, a nobody who writes a blog that maybe 10 people read. Don't worry, I'm not getting a swell head for being right...I know better. My point is that nobody and I mean nobody is infallible no matter what great calls they have made in the past and I don't care if they've been right as rain for 10 years in a row. Respect what savvy people think but you and you alone must be your own guru and have confidence enough in yourself to go against a famous opinion leader in the market if need be.
Bottom line: the air is getting really thin at this point of the rally but until the market actually starts churning or rolling over you better respect the action or risk getting run over. But correction or not, this bull market isn’t over.
.
No comments:
Post a Comment