Bear Market Rally

[trefoil]

Hmm. Decent majority up there at +20% and Sky's the Limit. OTOH, eyeballing today's CBOE Market Statistics on options, I don't see any signs of speculative froth anywhere, just based on today's action anyway.
I suppose the purveyors of doom, gloom, and sour grapes are going to need to have at least one good day next week, if only to keep the market in line.
But bulls are not known for being particularly merciful. As Ed Hart noted many moons ago, this is not an eleemosynary (look it up) pursuit.

 

[shortie]

i like your optimism.

but this is a bear market rally. they are often very sharp. this is not a "bulls-are-out-of-the-woods" rally. i totally expect new lows this year.

 

[trefoil]

The 9/7 short-covering rally was a classic bear market rally. This week's slow and steady march is another classic entirely: the slow but steady squeezing of the shorts' ... shorts.

 

[Swan Noir]

I agree. S&P is likely to end the year a good deal lower and go even lower in '12. This is bear market rally and when it is over the velocity down will be breathtaking. The big surprises are on the downside.

Quote from shortie:

but this is a bear market rally. they are often very sharp. this is not a "bulls-are-out-of-the-woods" rally. i totally expect new lows this year.

 

[trefoil]

You guys must be watching a different market than me. It took until Wednesday to challenge the high made on 9/7, but then fell back. It blew through that on Thursday, then settled into a half percent up move on Friday.
In other words, it took four days to make back the distance it covered in one day on 9/7.
The other tell, a pretty obvious one, is that we had down moves to start the day every single day this week, and then it was up after that. Old rule of the markets: the dumb money is early, the smart money moves in late.

Short and sharp. Yeah, just keep repeating that to yourselves as you put yourselves to sleep...

 

[Swan Noir]

trefoil,

I don't think any of the bears -- of which I am one -- in this thread discount that this could be a powerful rally and one that can be a moneymaker for those that trade it nimbly. That said, some of us believe that this is a classic bear market rally and that in the relatively near future -- before year end -- this rally will end dramatically.

Are we right? Time will tell but I think it is important that the bear case is put in context rather than left out there as if we think real money can't be made being long. Big money can be made very quickly in these rallies and a few nimble traders will do just that.

Hope you are one of them!

Quote from trefoil:

ok four days to make back the distance it covered in one day on 9/7.
The other tell, a pretty obvious one, is that we had down moves to start the day every single day this week, and then it was up after that. Old rule of the markets: the dumb money is early, the smart money moves in late.

 

[trefoil]

Me too! Good luck as well.
To be fair, the VIX I'm sure has one more spike in it before we put a spike in the bear, but if this really is a bull, well, another old rule is that bull markets don't give easy entry.
Simple test of if this is for real is if we go back to the Friday before last's close. If that happens, well then this isn't the real thing.

 

[SteveNYC]

Quote from trefoil:

Me too! Good luck as well.
To be fair, the VIX I'm sure has one more spike in it before we put a spike in the bear, but if this really is a bull, well, another old rule is that bull markets don't give easy entry.
Simple test of if this is for real is if we go back to the Friday before last's close. If that happens, well then this isn't the real thing.

Bulls charge quietly while da Bear is sleeping.

Bulls charge with full steam ahead when da Bear wakes up.

Same old, same old,...

Be a dipster and buy the dip.

 

[Swan Noir]

I believe the relentless selling in August simply caused the strong bulls to throw in the hand and I think they will swing but not invest going forward. Those that have bought for a new high, IMO, are bulls that will throw it all overboard in the next brutal down spike as the sophisticated short the living sh** out of this precarious market.

A breakout of the range would be great and then scale in starting at 1250 or so.

Quote from SteveNYC:

Be a dipster and buy the dip.