That all familiar intraday pattern from 2009 is making a comeback during the past 2 weeks. We have had gap ups almost everyday since the bottom on March 16, and the intraday pattern has usually been to dip in the first hour and then squeeze higher into midday running off big chunks of points and killing the bears. This is a classic pattern from the 2009 days and it bodes to underlying strength as well as a group of investors fleeing at the first sign of weakness only to have seller's remorse.
Things that often get mean reversion traders killed is shorting V bounces thinking stocks are overextended, and overbought when they only end up getting more extended.
We are in a raging bull market, and you have to have perfect short entries to make money on the short side. And the money made short will only come in flashes and big chunks like flash floods in a desert. If you aren't completely dedicated to shorting, it is hard to make money on the short side in this kind of market. The opportunities are too few and last for only a few days.
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Be careful, final run here for US, data too good for QE3, so no printing, final moves in some commods, this will mark a peak in EM and Asian inflation rates so go long EM and Asia from here not US. EM and Asia basically rally stopped when QE 2 started the only thing take higher has been the FX i.e. Russian Ruble, Sing Dollar etc. QE 3 probably in Q4 so be long gold by then, US has no credit growth so Ben will print more eventually.
I wouldn't be long either EM or Asia if the US was to falter. I don't believe in decoupling. Retail still puts most of their money in foreign equities instead of domestic. EM is still too loved compared to US by the public.
Decoupling short term no but just plot SPX versus Asia over 10 years... retail has been right, this is no different to SPX versus Japan post 1989.... US isn't a mirror but shares too much in common with Japan... the difference is bonds or equities... Japan was bonds because BoJ kept yen strong US might be equities as Tiny Tim and Ben will keep weakening the US$... but unlike JGB's you might not get a real return in US equities but you will get a real return in EM and Asia
Also keep in mind the only people to have bought Japan over last 20 yrs has been foreigners, Japanese retail bought EM... retail doesn't alway mean retard as the insto world likes to think.
Yeah, retail can be right for a long time but I don't see anything compelling in EM right now, or the US for that matter. Valuations in EM aren't that compelling and the future growth there is overhyped IMO.
I think EM and the US both go down next year but you've got to play musical chairs until reality sets in and the music stops.
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