When it comes to politics, almost every person I've ever spoken with about it in my life is from the same party: Economically Conservative/Socially Liberal. It seems a sensible stance, doesn't it? Who wouldn't want to be prudent with money and open-minded about fellow humans? But obviously not everyone belongs to one party; there is a huge divergence of opinion.
Similarly, when it comes to investing, everyone seems to fancy themselves a contrarian. Who doesn't want to imagine that they and they alone are the ones courageous and intelligent enough to buck the groupthink of the herd? But, as with politics, it is absolutely certain that not everyone is a contrarian.
Sometimes people don't think being a contrarian is cool enough; they have to be a contrarian's contrarian. I pride myself on being a contrarian (and I hope some of you will grant me this title), but any time I express an opinion – ANY opinion – there are bound to be those who have to say that, no, Tim, you are wrong, the actual way things are going to go is thus-and-such.
Last Friday evening, I, Tim, the permabear, jumped up and down about how a big rally was coming. Almost instantly, I was told in the comments section that the fall was going to continue in a big way on Monday. Well, we can see now, this isn't the case.
So my conjecture remains utterly and totally unchanged from last week: a rise to 1400, and then puke-o-rama. Here, again, people just disagree with me. They say the 1400 level on the S&P is "too obvious". Well, the head and shoulders on Apple was so "obvious" that a 8-year old could have spotted it, but it worked beautifully. "What is obvious is obviously wrong" is one of the stupidest of the many stupid trading rules that exist.
I have other things to do, so I'll make this quick – – the balance of the countertrend rally is murky to me. The S&P could keep fighting its way to about 1410 or so (keep in mind, I've been saying "1400, plus or minus a few points", not 1400 on the dot).
The S&P 100 looks poised to travel south, although obviously this isn't going to happen if the S&P 500 has another 15 points or so to move higher.
The transports look especially enticing on the short side, as the price approaches the midpoint of the broken symetric triangle.
I'll say this, though; if a steaming pile of dog crap like Groupon can move 40% higher, as shown below, you know that the quality of this miniature rally isn't very high.
I'd also like to point out that the very obvious pattern on CLF, which I yammered on about endlessly, has lost over a THIRD of its value since I brought it to your attention, so there are definitely opportunities out there on the short side.
Thanksgiving often has a lot of buying strength around it. That's fine. Keep getting this market to a safe level conducive to shorting. The "obvious" trade will only appear sensible when it's in the rear-view mirror.