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The future ain’t what it used to be.
-Lawrence “Yogi” Berra
MARKET WRAP UP 10/05/10
After digesting the move higher in early September for the past two weeks, the market illustrated today that the summer highs, of roughly 1130 on the S&P 500, have now become strong support. Including yesterday, the bears had every opportunity to take this market back down into the choppy and sloppy trading range where market players spent several months essentially risking dollars in order to make a penny here or there. In addition to 1130 acting as current support, the bulls also firmly held above 1150, which had been acting as tough resistance over the course of the past two week’s consolidation. Beyond the S&P closing up 2.09% to finish at 1160, breadth was incredibly strong, and we even saw a nice uptick in volume compared to that which we saw during yesterday’s dip.
A day like this is a firm reminder to always trade what you actually see, and drown out the noise as best you can. After a sharp rise from the August lows, technology stocks could have easily rolled over and taken the broad market along for the ride down. Instead, they took a benign pause for two weeks and resumed their march higher today. Simply put, that is what I see, so that is what I will trade. At the end of the day, price is all that pays. Macroeconomic headwinds, inept central bankers, and poor unemployment are all good reasons to avoid claiming at dinner parties that all is well with the world. However, those ideas will not matter much to Mr. Market if he is set on going higher.
Barring some type of sudden reversal, Mr. Market does, indeed, have higher prices on his to-do list.
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sweet write up CnW, a true class act.
re your title, I hope this guy takes it to heart.
Thanks, Danny.
I am NOT a Yankees fan,
but I am a fan of Yogi Berra.
One of my favorites: (paraphrasing)
“If you can’t copy em’, don’t imitate em’.”
You’re a great teacher,
and imitation is the sincerest form of flattery.
Thanks for all you do.
Thank you.
Awesome posting yet again all day. Hat tip my fine Sir.
Thanks, Kenai 😉
“higher prices are expected”
— see, I like your analysis…. but this comment contradicts your beliefs and shows your bias.
Mr. Market does what Mr. Market does. Why are higher prices expected now? Wouldn’t it make just as much sense to expect lower prices, since the market rushed up to new highs without XLF, without IYT (making new highs) and most of the IBD names also are not at new highs.
If I were somehow running the money, I would have shorted the market at the close to set up a big drop Wed. morning — and catch a lot of panicky people for a huge win in the first hour.
Who knows what happens next? Expecting higher prices after a day like today though is probably asking for trouble. Especially when 99% of the investment community is likely thinking the same way.
We shall see what we see. You can certainly learn a lot just by watching.
Well, if I am going to risk capital then of course I have to form an opinion and a bias. However, my opinion is derived from the price action, not from some inherent belief that the market will always go up or is destined to fail.
If you think 99% of the investment community is expecting higher prices, then venture out on to the twitter stream and you will see doubter after doubter calling today a “blow-off top” despite the fact that we had consolidated two weeks prior to today. Or go read Ritholz’s blog post about the smart money being aggressively short here. http://www.ritholtz.com/blog/2010/10/smart-money-gets-massively-short-ndx/
No financials? They acted well today, and just as energy was the laggard at S&P 1100, the financials could easily play catch-up here.
These two posts spell out the argument going on in my head (and I suppose every other investor that is heavy in cash).
I’m still not convinced that we continue to rally. September was a good month for me after selling April and buying through July, August & September lows.
With my money I am “raging against the machine” by shorting PM related stocks…and so far it’s no fun. Fortunately, there are gains to burn.
Love your Market Wraps…keep up the great work.