limtex, re: "we haven't seen real capitualtion yet". I disagree. Let me explain.
The "market" has long acted with a single mind. When it can't "pump" any more money into the system, it lets the air out. Unfortunately, in March, the balloon went too flat, too soon. So, the market makers reversed their stand and went into "dump and pump" mode.
First, institutions take tax losses, move into the DOW, and accumulate whatever cash they can (not much in a bad market). Then, they trade with abandon -- fearless that they can lock in gains at will due to their prior tax losses. If everything evens out, fund managers look like heroes who survived a "tough year". And bonuses are abundant.
Meanwhile, corporate execs have busily sandbagged their Q4 estimates so that they can enjoy a confident Xmas and fat bonuses too. Unlike the three previous quarters, you rarely see any earnings shortfall preannouncements in December. Because there's no reason.
Insttutional managers know this so they start bidding up prices until at least the Q1 earnings season. They usually go a little too far so, by Spring, the market has ballooned out-of-shape. The "air" starts escaping, everybody covers their butt, and the cycle repeats.
Welcome to the "New Economy" in action. My gut says that we should all relax and get ready for a pleasant holiday season.
Craig |
