Since most people think we get a rally on the bullets, I am going with the opposite. I think that the only thing that is keeping this market from flat out collapsing is the threat of war and the fact that people are expecting a big rally once it starts.
I agree. This has to be one of the most anticipated wars in history. As such, investors who believe in the "when bullets fly" theory, are likely already in the market. Therefore, the smart money will be shorting the "bullets" and the dumb money will soon find out that, once again, buying the media sound bites is gonna bite them in the ass. They will consequently start dumping as soon as they learn that "this time is different."
I will heavily short any bounce we see but I seriously doubt we see much of one. Indeed, it's possible that the Big Dump starts when the bullets fly as all the CNBC buyers will be 100% in the market by then and there will be no money left to drive stocks up.
This analysis assumes an uncomplicated war, no use by Iraq of chemical or biological weapons, no further terrorist attacks, and a dropping oil price (i.e, it assumes a Goldilocks response to war). I seriously question the validity of all of these assumptions.
best...
LIG |
