Friday, October 25, 2013

Bidders Underneath

After the earnings beats and gap up from MSFT and AMZN, I expected the market to gap up higher than it did.  I was looking for a selloff at the open based on previous experiences with overbought markets that gap up based on bellweather earnings beats.  The market hasn't given an inch.  No selloff.  It just goes to show you the strength in this market, with bidders underneath, waiting to get on even the slightest of pullbacks.  We got that pullback on Wednesday, and it was eaten alive and disappeared within hours.

I see the sentiment polls. There are a lot of bulls and shrinking numbers of bears.  But I also know that when the VIX spikes like it did on October 9, you don't top out two weeks later when there is no catalyst.  That is why despite the high bullish sentiment, I don't see a top anytime soon.  At the earliest, I think we top out by November 15.  At the latest, early January.  I still think the Nasdaq will outperform the S&P, as the market flattens out and fund managers look to outperform by buying momentum stocks.  Tech also tends to be one of the strongest sectors in Q4.


Anonymous said...

I just started to read your blog. I am impressed with your intimate and practical understanding of the equity market. Are you a professional investor?

Market Owl said...

Thanks for the compliment, I don't know what you mean by professional investor, but yes, trading/investing is the only way I make a living.