Monday, May 18, 2009

So Much For a Pullback

Not long ago I asked myself: what's driving this market (here). Looks like the answer is clear: it's driven by sentiment.

Sentiment is always a contrary indicator. There are two major themes in most commentaries. Bulls think that there should be a significant pullback and they are ready to buy that pullback. Bears still don't believe that bull market is for real. My unscientific count on CNBC is about 50/50. Which probably means that rally is going to continue. By all counts, it would be incredible, We had 9 weeks of bull market and now it looks like consolidation. But this market is incredible.

Technicals look better after today's rally. Nasdaq composite crossed above 200 day moving average. If it can hold here, we have a technical confirmation. As for fundamentals, they are still bad, but there is some improvement.

I'm getting ready to buy more. More tech, some REITs, some European companies or ETFs, some debt ETFs or CEFs. And I'm looking for other opportunities.

This bull market will be over when we see a buying panic. That's going to happen when everybody turns bull and start buying everything in panic to be late. Close to the end of quarter it can be multiplied by window dressing. It will be the time to take some profit. For now: buy, buy, buy!

Seeking Alpha Certified


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