we have huge short interest positions in many names
IMO this is a major factor that seems to be helping "fuel" the market rally. Those who are actively trading in this market seem to be those who are "survivors" of both bull and bear market periods, and probably are able to trade both long and short positions successfully. Maybe some of the "rules" used to judge when a market turn might be happening have changed, based on the changed behavior of traders in the market who are "survivors"? There seem to be fewer people who are either 100% bullish or 100% bearish....with "blinders" on, who refuse to consider other market scenarios?
many of the easy sellers are history
If you're referring to the "easy sellers" being those who needed to sell to take money out of the market, or those who needed to sell to take advantage of tax loss selling, then I'd agree with your thoughts.
An interesting post, that I read on another board. I've been gone all day, and I haven't read many posts...so if this is a repeat post, sorry for the duplicate post!
"From Rev Shark on RealMoney.Com:
A Turning Point?
5/12/03 01:50 PM EDT
The "C-word" has been making the rounds today. Usually we hear talk of capitulation at market bottoms, but the concept is equally applicable on the upside.
Capitulation is simply the point where the disbelievers can't take it anymore and decide to join the party. The theory is that when the diehards throw in the towel and finally admit that they are wrong, then a turning point is near.
One of the problems is that there is no real clear definition of capitulation, so its always a bit of a guess. Typically what you are looking for is a big final burst of action after a fairly long trend. Big volume and a big move after a long uptrend would probably be signs that some of the more stubborn bears are giving up and have decided they have to be in this market at almost any cost.
So does the action today qualify as a capitulation top? It is a big move but volume isn't particularly huge. Breadth is close to 2 to 1 positive, but what is really amazing is that we have 415 new 12-month highs to only 17 new annual lows. That tells us that the buyers are chasing the stocks that are at highs, and that is capitulation-type action.
Overall, it does look like we have some panicky buying, but I'm not sure it is sufficient to deem it capitulatory. It certainly feels like it's a bit late in the party, but there continues to be too much momentum to feel comfortable that a big reversal is forthcoming." |
