Monday, April 03, 2006

Hmmm, Interesting Day...

No links here, just some general commentary. As noted yesterday, the market gurus got all giddy when GM appeared to close the GMAC deal and LU/Alcatel became official.

But like all aging Bulls this one seems to be running a little short of breath. I still think we've got one more good leg up another 5% or so, but then it's good night Eileen. It's going to be hard to pick that top, so I'll be neutral to stock specific short in here.

I've not back-tested this theory, but I think there is a meaningful shift in market mentalities post-2000. In the past, when stocks jumped on news (or fell on bad news) it was very easy to pile on and join the trend. I think there is a pretty good opportunity for hedge funds to trade the gaps (buy the big drops, sell the big jumps) for gain. Take today - if you sold the leading % gainers at 10am you would have made about 10% today. Not a homerun, but not bad either. I'm going to run some data and trial portfolios over the coming weeks to test this theory a bit more.

*** Full disclosure my last jobs were in highly volatile option oriented hedge funds. These are not investment vehicles for the average investor and my comments should be viewed as a reflection of market psychology, not a guide to personal investing.

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