The market was beginning to base at that time. The disaster shook out the weak hands providing a place for the market to rally. Add to this the unprecedented liquidity in the market, as far as bear markets go, you have a formula for the subsequent and continuing rally. I am sure the fed actions have helped facilitate this liquidity we are experiencing in the market. I suspect we will get that key retest of support sooner or later. But it will not be in the form many bear market strategists are expecting. By the time it happens, there will have been much money to be made as a trader.
I want to underline that we are traders, and not investors. You have to go with what price action is telling you, anticipate the outcome, strategically place the trade, and respond to what actually does happen in the market. Those who have approached the market in this way could of ended up making some good money. Also keep in mind the more the apparent risk is in the market, the greater the likelihood of significant profits. Please note I used the term "apparent risk" instead of "actual risk". Read the book by Justin Mamis called "The Nature of Risk" to understand this concept.
Consider how many have been viewing this as a bear market rally. Bear market rallies do move with some gusto. This is a very good time to trade for profits, other than the "sweat spot" the market reaches during an exuberant bull phase of the market. This is prime time for traders. Who cares if and when it becomes a "bull" market? By the time that determination is made, smart traders would of already made a substantial profit. And this still would be the case even if the market does eventually turn down to resume its bear trend, proving the bear market strategist correct.
Other than to help the trader get an overall feel for how the market is trading, determining what type of market it is, "bull" or "bear", is irrelevant. Just go by what price action is telling you. And look for developing patterns. Leave the longer term market prognostications, in other words the "coffee table talk", to the arm chair stock market gurus. Meanwhile, the rest of us can be making some money.
JMHO.
Bob Graham |
