Greetings from the southbound CalTrain. I bought my freakin' ticket 4 hours in advance this time, so, God willing, I'm not going to be incarcerated or otherwise troubled.
I know it doesn't take a stroke of brilliance to posit that the market will either be (a) Up; or (b) Down, but I'm serious about this. To explain……..
Just as I was expecting today to be up, I'm expecting tomorrow to be down. It would surprise (and somewhat damage!) me if we witnessed something along these lines in the coming days and weeks:
The reason this might happen is twofold: (1) we neatly bounced off the Fibonacci retracement level today, which is acting as support (2) let's face it, the bulls have a lot of momentum over the past ten weeks, and it doesn't take much for them to simply dive right in and keep buying. Up markets beget up markets.
What I think is more likely – and much healthier for the bulls and bears alike – is something more like this:
Take careful note that my "down" scenario still has the market going up – – and going up quite handsomely! I have maintained for a long time that I'm not expecting the bears to wrest control back from the bulls for any sustained period until this Autumn. But I do think a "quick scare" down to the low 800s would do a couple of great things for the market: (a) give a great exit for many of these very powerful bearish positions; (b) provide a terrific re-entry point for stocks which have proved their ability to climb but needed to ease back to more sane levels.
If we can ease back, I think some of the easiest/cleanest profits to be had will be those made from riding the long side from the low 800s to the low 1100s.
This is an astonishing bumpy train, so it's kind of a miracle I've gotten this far. In any case, that's my broad view of the market. I want to say again how much I appreciate the community here, and even though it's totally out of my hands, I'm sorry the comments system (Disqus) was so troublesome today.
