Correction zone dynamics
As I have said before market continues to be in correction zone. The market has gone sideways for few weeks now. There is option expiration on card. So what we are witnessing is normal correction so far.
Two possibilities exist at such juncture. First that there is massive distribution going on quietly and the market will tank at some stage. You throw a stone in the blogosphere and 99% of the bloggers are talking about this scene. The second possibility is transfer of stocks to stronger hands from weaker hands. Market corrections often scare people in to selling their holdings and then they realise after few weeks that they were fooled in to selling early. So under the guise of correction , there might be accumulation by big speculators going on. Both possibilities exist at this stage.
As of now I do not see much on my short scans, so I am open to a possibility of another run up post the correction. When market enters real down zone the scans will show shorts. Currently I see underlying bid and accumulation in some sectors.
As always flexibility is the key and one should not get married to a hypothesis.
Two possibilities exist at such juncture. First that there is massive distribution going on quietly and the market will tank at some stage. You throw a stone in the blogosphere and 99% of the bloggers are talking about this scene. The second possibility is transfer of stocks to stronger hands from weaker hands. Market corrections often scare people in to selling their holdings and then they realise after few weeks that they were fooled in to selling early. So under the guise of correction , there might be accumulation by big speculators going on. Both possibilities exist at this stage.
As of now I do not see much on my short scans, so I am open to a possibility of another run up post the correction. When market enters real down zone the scans will show shorts. Currently I see underlying bid and accumulation in some sectors.
As always flexibility is the key and one should not get married to a hypothesis.
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8 comments:
You are right. The masses cannot resist the attempt to magically predict a top.
There certainly is a fine line between marrying your hypothesis and taking heat against a correct position.
flexibility includes not seeing yourself as you against the bully shorts and top callers...
it may be a top or it may not... tops do exist and have happened, so it may not pay to be too confident in either hypothesis... you can always find high quality longs and shorts in any market
At this stage no one knows which way is right way. Only Goldman Sachs knows !!!
and they are down for the day on good vol
Good quotes:
"By buying every bull market correction, you’ll only be wrong once, at the top; vice -versa for bear markets. More talk exists about finding bull market tops than positioning oneself to take advantage of the trend."
"Most folks would rather have other folks think they are smart than to make money. Trading with the trend doesn't challenge them sufficiently, so they do something else."
The same goes for bottom callers in a bear market.
Goldman may indeed know with Paulson at the treasury pumping that M3.
thats one reason to be very skeptical in this rally - M3 pumping
Institutional players are only worried about one thing: marketability of their current positions. Increasing liquidity mitigates this risk in the short term allowing them to continue hold or buy. Hence, the rally we have seen and continue to see since late August.
Intermediate and long term market prospects may be uncertain but there's no reason to call a top yet.
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