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MARKET WRAP UP 10/14/10
After yesterday’s continuation higher, the bulls took a breather today as the S&P 500 finished down 0.36% to 1173. In what is becoming an increasingly common occurrence, the market gave the bears some hope in the middle of the day that we would see more of a prolonged sell-off. Instead, the bulls once again presented themselves in a meaningful way to scare off any serious sellers. The nature of a market trending higher is that we mostly see thrusts higher, followed by benign pauses. It is only when market players become so convinced and complacently assume stocks will obviously trade higher, that we see a correction.
After-hours, I see that $GOOG is up 9% on an earnings beat. Should those gains hold into tomorrow, I would expect to see the Nasdaq Composite Index have a solid day. As I noted last week, just because we are in earnings season it does not mean that the volatility will automatically take the market lower. In the short term, a huge move higher tomorrow may be a good time to lock in some profits for the sake of discipline.
With that said, I know why the caged bears are crying, and it is because they are fighting a potent trend that formed in early September. Roughly six weeks later, the bears are equally as inept at calling any type of top. Eventually, the tide will change and the market will likely see a 3-5% correction. However, whether that sell-off happens tomorrow, next week, or next month is anyone’s guess, regardless of how aghast the bears are with a market that seemingly defies gravity.
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What if a prolonged correction starts with a 5% decline at the open? You know what I mean, no chance to react?
then you stop out, and you lose whatever your predefined risk was?
Yup. What Danny said.
I am so ashamed of being a bear right now that I will force myself to wear a dress to work until Dow comes back to 10000.
The bulls are playing with us like we are Built A Bears. They throw us up and down. So far they have pulled off both an arm and a leg.
I used today to lighten up on my shorts and take a long hedge. There will be a better time to short. Tomorrow is POMO day so not good to be short start of the day.
The banks has been insolvent forever. That is no news. BAC should hold 12. C should hold 3.75ish. WFC should hold 25. Roubini is out again on his soap box. That is no news.
The Phiigs are still bankrupt that is no news.
Need a catalyst
Tough to argue with you about the banks being insolvent. They clearly are zombies. The trends of the market are often disconnected from reality. Believe me, as an American I would love nothing more than to see inept bankrupt firms go out of business.
nice one.
I propose a dictionary addition for this whole sordid period. I call it, “6 week bears” that being a play on words where weakling bears bear the burden of a mauling by bears for 6 weeks. Sort of has a trail of tears ring to it, which I like.
LoL. I think The Fly said in The PPT before that he did a few studies and that it is usually 7 weeks.
Great picture! No trades on right now but am bearish on things economic. The real crying will occur when/if this ramp up on dreams of free money ends. It may not, but DOW 30,000 may not be as fun as some think.
Yeah–might need to see max pain for bears first.
dow 30k, dow 100 priced in gold. that would be fun.
I could be wrong but I thought I read that short interest was at a high as of late, how can that even be true? Who is that stupid?
Perhaps its the ego behind the money?
Damn Chess, not only do i learn from your market reads….i can even enjoy a literary “shout-out” with a maya angelou reference. Gotta love the sophistication of a lil bit o chess and a lil bit o wine
Your posts just keep getting better and better. You truly are a class act. Kudos Chess.