Thursday, August 9, 2012
This Is A Wrong Rally. Dom't Make Money From It!
If sentiment was the only indicator, I'd say that this rally has a long way to go. Everybody is telling you to be cautious. Careful out there! is the mantra. There are a lot of unknowns, fundamentals suck, Europe is going to crash etc. Oh well. My answer to it: never let your preconceptions to stay in the way of making money. This rally is making me money, because I'm long a lot of stocks. Yes, some of them under water. It always happen. You always make mistakes. The name of the game is to lose less money on losers than you are making on winners.
Unfortunately, sentiment is not the only indicator. Fortunately, technicals are great too. S&P is over 1380 level of resistance. Nasdaq is over 3000, again. Dow, who cares about Dow nowadays?
There is something to say about fundamentals. True, economy is slowing down. True, China is in trouble, and not only because of Europe. Europe is in crisis, US is barely growing, these are legitimate fundamental concerns. And so far I don't see which way chips will fall.
So, I really don't know when this rally is going to end. It looks different from June and July now. Then, we either had the beginning of the week down and rally on Friday or the week up and Friday drop. Now, it looks like overbought condition is getting worked out as a function of time. We'll see.
I am less bullish now than two weeks ago. But still bullish.
Posted by Alex Filonov at 5:15 PM