Mike, agreed. The fear gods will inject their venum this week due to the recent run-up, and options expiration week. So they can position themselves for the next-bull run during the following week, before the FOMC meeting. Par for the course. But, the fact remains that there will always be investors who short the bottom, and one's who buy them. You cannot have broad-selling across the board when there are no sellers, which is exactly what we witnessed this past week. The selling looked tired, because it was tired, markets responded positively. UNTIL THERE IS MORE SUPPLY INJECTED INTO THIS MARKET, WE ARE NOT GOING TO SET NEW LOWS. Market sentiment is turning the corner, and the dips will be bought, just like they were last week, because AG is providing SOME support, and investors will not worry about market caps or heavy losses over the long-run. Market caps are front-page news during a bear-market. Their disregarded in bull markets.
Are we still in a bear market? Yes. Are we still downtrending? Yes. Is the price of oil moving higher? Yes, are natural gas prices going higher? Yes. But, the fact is market breath is turning positive. Small caps, and penny's, like COVD, SRTI, ect., were bought up in droves sitting at their lows, and sorry to say my friends, but you won't see them trade at those lows again this year. That is a start to ending the down-trend, investors buying and holding, no matter what the price is. Soon, the monkeys will begin throwing out ridiculous price targets to the masses, and the masses will buy into the hype again. This takes us to the big-caps, many of which are stating earnings this week.
Most investors know earnings will stink, and most know projections going forward will stink, too. But, most investors know that this will not last forever, and some investors will begin to buy speculatively and hold for the long-term, INCLUDING fund managers! As this occurs, shorts will only drive prices higher, as hedge fund managers realize the risk/reward on the short-side is simply not there any longer, and they begin to play from the opposite sideline, which begs to ask another question. Where are the 401-k inflows going? We will find out soon enough, but historically, January and February are the two biggest months for inflows, and that money will be put to work in the market soon, because most investors on the sidelines missed the 300 point market melt-up. If they have a second chance to buy the recent lows in the short-term, they will.
Until there is more supply dumped on the market from lock-up expirations, or more IPO trash, I believe the damage over the next month or two will be minimal. Late March, and early April is when I expect to see another melt-down. Looking at charts from a long-term perspective, the monthly fast stochastic has turned up, and the slow is right around the corner. The weekly indicates a possible run towards 3000 and beyond, then the almighty pull-back on the weekly and the monthly, because investors who didn't get out before will now have the opportunity to do so. The second leg down, will be the time that we may set new lows, if the old lows are to be broken, which will happen in late March or early April, just before the tax man arrives.
I am speculating that the above will take place by reasons stated above. Those who agree, great. Those who disagree, state your case and put it in writing!
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regards,
KM |
