Thursday, November 12, 2009
Buying the Dip
If the market can go a bit lower today, down to around 1085 area, the lows for Tuesday, I will look to go long for a trade to hold overnight. I don't think we're gonna roll over just yet. I don't see the dollar rallying much further, and I expect traders to cover shorts, and get long again on Friday hoping for more fund buying on Monday.
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2 comments:
Market Owl, I like your measured analysis quite a bit. I have lost my mojo so I am going to be consulting your blog. When do you see this rolling over? Have you checked sentiment indicators and do you rely on them at all? As of a week ago, they were very bearish, which is bullish from a contrarian standpoint. I do not see the public back at all in this market. The middle class has taken quite a hit and the job market is very bad. Final question: who is gunning this market higher and higher? (and higher)
I do look at the sentiment indicators, but they only come out once a week. Of course, I like to be contrarian when it comes to sentiment. But they add more value at extremes. When they are stuck near the middle, they don't really mean much. Right now, sentiment is about neutral.
Retail isn't really buying here. Mostly, it's hedge funds going from net short to net long this year. They are mostly performance chasers, they are NOT strong hands. Pension funds are also probably adding exposure after getting scared last year, but they are not aggressive buyers.
This rally keeps going because there just aren't that many willing sellers. The people who wanted to sell the "bear market rally" have already sold. The only catalyst I can see taking this market down is a rush of secondaries and IPOs. Otherwise, we're probably not going to get that big drop till we go higher.
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