Even with the violent post-earnings Apple selling, top-calling shorts are proving inept at profiting from a broad market correction yet to transpire. Markets which trend higher are uniquely and notoriously difficult to top-call, particularly when it seems most logical for the pullback to materialize. Clearly, Apple’s earning’s disappointment was the most sensible starting point for a broad market correction. Instead, Apple is down over 10%, while the S&P 500 has just cracked the widely-watched 1500 level.
My point in driving this analysis home over the past few weeks has not been to taunt the bears. Rather, it was to develop the thesis that cyclical bull markets, which we continue to be in since March 2009, can go on much longer than seems probable. I would welcome a consolidation to allow me to increase my current long exposure inside 12631. However, the market does not much care what I would like to see, or what seems like simply must happen based on prior instances and current indicators.
I began to increase my selling into strength yesterday in order to lock in some profits, and that will probably continue today. Thus far in 2013, avoiding the premature big bet on the short side has been the key to not making the big mistake. And I hope my analysis has been useful for that, if nothing else. At this point, I am still not looking for a major top so much as I am trading around a strong rally.
I’ll be back in a bit with more specific stock and sector analysis.