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I’m not going to sugarcoat it: today sucked out loud for me. I actually got stopped out of very few positions, because the “big picture” tops are still cleanly in place, but the huge relief rally we got definitely took a hatchet to my portfolio profits. Since I’m always happy to share success stories, I thought I should at least be as eager to share something less gleeful. So there you have it.
Having said that, I have been asking myself: how big is this relief rally (which I think is largely going to be driven by the relief-in-commodities rally) going to be? Traders more nimble than yours truly definitely benefited from the bounce of some horribly-oversold issues, such as Magnum Resources, which jumped 70% today alone (!)
See: 2007, when everyone was convinced of ‘Peak Oil’ and there were websites named ‘Peak Oil’, ‘Oil Drum’, etc. constantly reinforcing the mania.
I remember being away on business one day in 2007, with nothing better to do in my hotel room than watch the congressional debates about ‘peak oil’ and what to do about the evil speculators that were driving prices up. I enjoy watching a good mania as much as the next guy. I realized that what we were seeing was ‘Peak Hysteria’ with respect to this phenomenon. I thought, ‘Yup, Prechter’s right’.