I've mentioned a few times in the past about the "a watched pot never boils" syndrome wherby the market gets overbought but because so many people were aware of this and were trying to fade the strength the market wouldn't budge much to the downside and instead, finds a way to grind higher still. This is what we've been seeing. Evidence of this can be found by the put/call ratio. I've been noticing some abnormally very high readings a couple of times these last 2 weeks in the face of market strength including today. At the same time rydex traders are dragging their feet in embracing the bull side. Thus, what this tells me is that the trap door is not ready to be sprung just yet.
I still believe this rally is of poor quality destined to fail but if too many people believe as I do Mr. Market is not going to oblige so easily. He will do whatever it takes to frustrate and shake out the top pickers while sucking in weak longs. Then and only then will the rally fail (if its indeed destined to fail as I think it is).
I'm noticing the retail permabear....er....trading community are trying to outguess and fade each other so that they don't end up being the sucker but in the end no matter what they do they still end up being the sucker. It kind of reminds me of this scence from the classic movie The Princess Bride
No comments:
Post a Comment