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Over the past few days, Mr. Market has adopted more personalities than Joaquin Phoenix after going off his meds. There are a couple of ways to view the increasingly violent price swings. First and foremost, remember that we are still in the midst of earnings season.
To me, trying to be a disciplined swing trader during earnings season is a lot like being invited to a party at Barney Frank’s house: It might be high profile with a lot of fun times to be had, but it’s just not my cup of tea. Beyond earnings season, the S&P has had an impressive run from 1040 up to 1189 today, and a 3-5% correction would be entirely reasonable and healthy within the context of a rally.
With all of that said, however, I want to remind you of how many serial top callers and underinvested bulls miss out the meat of virtually every bull run. There were a few days like today in that February-April run that we had this year, and they were not, in fact, the top. Instead, they proved to be excellent buying opportunities. Why, you ask, do so many people miss out on the majority of bull runs? The answer is because Mr. Market is a hater of epic proportions, even more so than other financial blogs who refuse to link to iBankCoin despite our heavy web traffic.
As I am writing this, I see that we continue to reverse hard off of this morning’s gap higher. We are back just below the support trendline, but I will look to see if there is more follow through before being too conclusory about whether this is “the top.”
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