Thursday, November 13, 2008

Re-test and bounce....

The bears turned bulls were hopeful that today would be the day we retested old lows, so they could get more bullish.

We retested those lows around 1pm and almost immediately you could see the flow turn sharply. There are two theories on the power of crowds. One says if everyone is running in one direction, they must know something and you should jump in. The other theory says they are are all about to run off a cliff.

The fact that everyone is picking the exact same bottoms makes trading this market very easy (just do the opposite of the crowd). These bear market rallies tend to be violent so watch out if this gains steam.

Having said all of this, business in corporate America remains stunningly bad - I'll follow up with some data points later tonight.

2 comments:

Anonymous said...

I think close to 500+ again tomorrown, then it may stay up for a bit. The talk about solving consumer credit card debt is what is going to help, because it's the first tangible main street issue.

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Actually while there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period