This is what I said in my Oct 9th post,I am positive that we will get one big day, at least + 700-800 Dow points, between now and next Thursday. Today the Dow rallied almost 1000 points.
So have we finally hit the bottom? I think this rally was too predictable.
I think the real test for the sustainability of this rally comes next week when the expiration is out of the way and the euphoria around the government action is over. If the market is able to hold on to these gains next week then in my view the market may have dodged the bullet for at least a few months. Else the 2002 lows beckon the market in this very leg, yes it's very much possible even though it feels as if the government has righted all the wrongs in the economy in one brilliant stroke.
I closed the bear case on Oct 9th, even though I felt that the market could visit 2002 lows but it was not worth the risk being short anymore. The shorts who didn't cover last week would have felt the pain today. The same way the easy money has already been made by people who anticipated this move up and were positioned for it. This euphoria may last for a day or two more but it's not such an obvious trade on the long side now. Long story short, one can be right and still loose money in this market if the timing is off even by a day.
4 comments:
Amazing post on the 9th! Very perceptive. Mix in some politics in your next post. The way things are going and with the democrats continuing to gain strength, what effect will that have on the markets between now and Nov 4?
Thanks Skid Rust, I believe the market is able to discount things up to 6months in advance. Unlike McCain it may have already seen the writing on the wall and discounted it :)
If S&P 500 price on Nov 4 > S&P 500 price 90 days prior, incumbent party wins White House 4 of 5 times. That's all you need to know about this election :-)
Nice stats pcp! After watching the duel last night, it is abundantly clear who will win this election. Where the market is headed will only support the inevitable now :)
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