Ike, we're on the same page. However as to our crash being due to Russian rumors and therefore self-correct, I think its cause goes much deeper than that. People in the overvalued nifties that knew they were overvalued and felt they could escape the correction, finally cracked. This is about a bubble first IMO, & denial of the effects of a deteriorating global marketplace on US earnings and fundamentals. The herd has been lulled into ignoring the fundamentals because the technicals have been pointing up due to excessive liquidity.
They say TA has FA built into it. I think we can now add to that, "unless there's enough liquidity to temporarily override the FA". My case and point of that would be looking back to the three decling peaks we had this last Oct, Nov & Dec on all major indexes. They all looked like they were about to drop off the right shoulder to the downside. The technicals were a good predictor in that case of what was to come in FA - ie, there were indeed decreasing earnings ahead. So what to do with all that cash? Throw it at the market & create the TA to show the self-fufilling prophecy of an uptrend (in this case against the FA that's supposedly built into it).
That being said I agree with your summation "that markets will do exactly when element of fear is taken out what they have doing for last 4 years". Liquidity will override fear. I just think this last drop had a lot more to blame than Russia.
FWIW, I prefer being long to being short anyday!<g>
as usual, your analysis is greatly appreciated,
regards,
Tom |
