Agreed. I haven't been a permabear, Dennis. Basically, I think one would do well by going long when notes on SI are generally bearish, and short when the mood is predominantly bullish. (I'm only half kidding.) Recently, sentiment has been shifting toward bullish, and bearish predictions are being revised (or forgotten, or pushed out over more distant horizons) in hindsight.
But seriously, do I know where the market is headed? No. The funny thing about life on this planet is that the future is unknown. Many technical analysts haven't cottoned on to this fact yet, maybe because their minds are muddled by lots of squiggly lines that they believe to be predictive (when in fact all the lines do is smooth over the past). Newbies believe there are analysts out there with excellent records at predicting, when in fact no one can consistently predict the future with any high degree of accuracy. Generally, indicators and systems that test well in back tests don't perform well in future trading. It takes some traders a long time to discover this, but it dawns on them in the end. That's when they realize that the quest for the Grail involves the ever-demanding task of money management and discipline, not the search for indicators.
My own view is that complacency is too high in the short term (near 100 in my own foolish system), but not at an extreme longer term. (It's just begun to hit overbought levels near 70, but it could head to 100.) So we could get a pullback here in the short term, or longer-term bullish sentiment could push things higher, with a breakout in the short term, before the next collapse. So as you can see, I've said the market could go down or up, which is what most TA winds up conceding in the end. |
