Sure you want to hear it? <g>
I think there is an incredible buying opportunity coming soon, but we are not there yet. Maybe close, but not there yet. An opportunity well worth keeping most of your powder dry for and waiting for confirmation to go long on.
A true test of patience, but for those who watch and wait for the right moment, one hell of an opportunity. I think the possibility of more new lows is still a high risk.
I think this is just another bear market rally, a technical bounce due to oversold conditions, the standard pre-opex "oh my gosh I might miss "THE" bottom gotta buy NOW" ramp and within days longs who do not take their quick profits will be running for the door.
I still don't think we've had true capitulation. Not when every long term investor I know is still waiting to get their money back, and are still sure it's going to happen. And they have NO cash left to invest, so after shorts cover, whose going to buy? still massive outflows going on in funds, so those guys don't have the cash to hold this market up, they are the ones selling good stocks here to cover redemptions.
I for one want to see a new low hold for more than a few weeks before investing again, so I think jumping in 100% long on these rallies is deadly. Just like the last one, so many on SI went long, only to lose capital and sell at a loss a week or so later. I want to see institutions buying, fund inflows, and less "intervention" propping this thing up every time we hit new lows. In other words, real sustained buying and bullish chart patterns that hold.
I actually heard the comment "historically stocks always bounce back" at a restaurant this week. Almost choked on my food <g>
I think this week was just an technical bounce, an oversold short covering rally, the usual (and now so predictable) pre-OPEX ramp to the top of the channel that we've had the week before expiration for the past several months. If short interest is still really high, maybe it ramps a little higher than expected, or even breaks a good resistance area.
We will know by the Wednesday after expiration if this is "real" or not.
I think that the retest of the SP July lows seemed very "staged". Everyone was too ready and waiting to cover or buy exactly at that point, when it was just a number of a recent spike low, not true support.
Strong reversal, big calls the bottom is in, and many covering long term shorts at that retest of the low, which many mistakenly took as big boys and institutions re-entering the market. There was very little institutional buying participation this past week. It was mostly covering. And there was a lot of selling into the moves up. Most likely hedge funds were the most active in this move. And that's not positive long term, because if there is some kind of market shock, and a big move down, there's not many shorts to put a floor in, and a plunge could be steep and fast.
As far as amarket shock...I think whatever it is that finally causes true capitulation and the beginning of the indexes putting in a "real" bottom, will be a complete surprise, as it often has been. Something that's not even on anyone's radar yet, and shocks the hell out of everyone when they awaken to find the overnight futures lock limit down...
I think the pop was stronger than usual due to the fact the JP6 and the ladies stock clubs in Boca <g> has been heavily shorting the market (on Maria's timely suggestion <gg>)- at the lows, on the break of lows, when the pros are staring to cover and stand aside and we traders know that shorting for more than a scalp is dangerous in these current market conditions.
Last week I heard an acquaintance who trades a little mention that he was thinking of starting to short the market instead of buying long. Yes, NOW he has decided to start this.
Looking at any stock charts from this week, they all look like short squeezes, not longs taking big positions, many shorts were trapped big time on the gap up the other morning out of the descending wedge - which was not only on all the indexes, but many stock charts also. Smart longs and institutions don't buy breakaway gaps up to initiate long term positions. Speculators and hedge funds buy, but they leave just as quickly. I don't see any accumulation going on in any charts at all, still just distributions into every rally.
So we've just got to keep doing what we've all been doing...trading short term, buying support and shorting resistance (which there is a wall of overhead, on all indexes, and all stock charts). And overhead supply to da moon overhead, on most stocks.
The charts will tell us when it's safe to hold longer, as we won't have to question if the bottom is in, we will see it. Frankly with my $$, I'd rather be sure : )
Short term, I am a little less bearish than I was, but still see nothing to get bullish about for more than a short term trade, take the money and run.
I am patiently waiting for the day when I can INVEST again, and hold a stock more than 3 days...in the mean time, I'm doing a lot of research, watching stocks and keeping watch lists of potential candidates, so when the time comes, I will be ready to jump in.
All of the above, was my humble opinion only <g> |
