In hindsight, the sell-off until March 9th was just a shake-out move by the market! I bet all the retail crowd was short the market hoping to see another crash in the markets. I remember every blog was predicting $SPX to be at 450 back then (including me) and guess what the market does - obviously the exact opposite. Now, based on earnings in last quarter, was it justified to see $SPX at 450? Oh Yea. I mean S&P500 printed negative earnings for the first time ever. But now with the rally that started from March 9th, everyone forgot that the earnings were negative and the market is looking forward and hoping that the earnings are going to be alright going forward - thanks to Fed for making a big move last week, followed by Tim G. releasing his plan to buy toxic assets from Banks today.
Its amazing how the physche of the mob changes in just 2 weeks. I am waiting for the market to touch the 200EMA and then go short at that time. I am not too comfortbale buying anything after such a sharp move up. I hope I could know how much of this move is from short covering and how much is because of some genuine new money finding its way into the market.
Whats worth noting here is the action in $VIX. With a 500 point rally in $indu, the $VIX goes down by a mere 3 points? Are we going to see a pullback soon?
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