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Hit Me!!! (One more time)

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April 17, 2010 – Comments (7)

Random Thought:

Nothing to do with wave counts per se. I was just doing some reading this weekend, looking at both bearish blogs and bullish blogs. The bullish media and blogs (especially on Caps) are all saying that this is the perfect dip buying opportunity. The market needed a short pullback, GS and Greece issues are overblown, BUY!!!

You are a chump (very conspicuous used of this word in a number of places) if you don't buy. It is a bull market, buy the dip!

We who look at market sentiment and the Elliott Wave Principle realize this is a sign of a top. Sentiment is very one-sided. There is no opposition by the bears (we are all extinct and/or hibernating).

The bulls are doing exactly what the market has trained them to do over the last year. BUY THE DIP!!! The amount of uber-bullishness that accompanies this admonition is the very telling thing.

But to the real point of this post

Again, this is just a gut feeling. I am not going to support it with a wave count, just thinking out loud.

    * Friday has the shaping for an impulsive sell-off into next week. It *could* develop ... or it might not

    * Bulls are in full hubris mode buying the dip and telling everybody and their grandmother to do the same

    * Bears perked up a bit on Friday. Rousing from hibernation?

    * We are *near* the critical 62% retrace at 1228 on the SPX, but not quite there (peak ~1214). Many of us (including me) think it is "close enough"

    * BUT WHAT IF?

    * Next week goes exactly according to plan for the bulls? The dip does get bought and we make a higher high?

    * 1. Uber-bullishness will become uber-uber-bullishness

    * 2. ISEE sentiment reading *which are already OVER 2007 peak levels* will go even higher

    * 3. The bear population, having another correction swept away from them, will feel like cows going to the slaughter in pens pre-Dr. Grandin's curved corrals. And the market will receive another short covering burst

    * .... This would then bring us to major resistance with a dead bear population, bulls hopped up on testosterone and hubris (having just beaten another correction by buying the dip), and sentiment readings now rivaling 2000 levels.

I like this spot here for a turn. ... But I would actually prefer the above scenario to play out. I think that would be a lot more fitting. And based on the market behavior the last year, what this is really building up to, my gut is saying something similar might just happen.

7 Comments – Post Your Own

#1) On April 17, 2010 at 10:16 PM, ChrisGraley (29.97) wrote:

binve, I was thinking about almost the same thing!

I have a feeling that Monday will be an up day, but I'm wondering if it can carry through Friday's close.

There is a ton of overvalued crap on the market and even in the fantasy market our government has tried to build, it's getting to be like a stinking corpse being hid under the couch.  The smell is starting to give it away.

The bigger the day is on Monday, the less likely that it stays up through Friday in my opinion. 

 

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#2) On April 18, 2010 at 1:07 AM, binve (< 20) wrote:

Hey Chris, right on man!

>>There is a ton of overvalued crap on the market and even in the fantasy market our government has tried to build, it's getting to be like a stinking corpse being hid under the couch.  The smell is starting to give it away.

Indeed!

>>The bigger the day is on Monday, the less likely that it stays up through Friday in my opinion.

I would concur with that. Thanks man!.

 

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#3) On April 18, 2010 at 1:56 PM, Teacherman1 (51.70) wrote:

Would that mean we have another chance to buy on the "dip" next Friday?

You are right. Anything can happen in the short run, but IMO, if you buy good stocks, at good prices, time will take care of the ups and downs.

Just wanted to post something since I have been out of the Blogs for a while. Been very busy in my "other life".

Hope you both have a nice weekend and good returns in the future.

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#4) On April 18, 2010 at 2:02 PM, kdakota630 (29.85) wrote:

I hadn't put as much thought into this as either of you apparently did, but my guess is that we have an up day tomorrow.

A buddy of mine and I have been discussing this for a while.  I forgot what the incident was, but there was a big down day (probably about Greece) and my friend was saying, "I think this is it.  I think this is where the market finally starts heading down."  I told him I didn't think that was the case, and the Dow would break through 11,000.

Then yesterday he called me mid-day (which is a big thing because he usually calls me to kill time during his commute) about the Goldman-SEC thing, saying the same thing about the market heading down.  I think it's going to keep heading up, and probably break 11,500.

Basically, I'm in agreement with binve.  The market's been heading up for over a year now, fighting off all bad news to the point that people are going to start believing that nothing is going to make this market head down.  Except that's when it does.

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#5) On April 18, 2010 at 2:54 PM, binve (< 20) wrote:

Teacherman1 ,

>>You are right. Anything can happen in the short run, but IMO, if you buy good stocks, at good prices, time will take care of the ups and downs.

I have said before that the next year will be a stock pickers market. I do believe there will be good companies that will do well and also thrive in the coming environment.

But discussing individual companies is not, nor has it ever been the focus of my blogs. I am far more interested in the marcro environment that equities as an asset class will need to operate it. This is somewhat at odds with the mission of the Fool, which is to pick and value individual issues.

Thanks! I hope you have a good weekend too!

kdakota630 ,

Thanks man!

Thanks for sharing your story! I have to say, the prospects of the beginning of a sharp move down on with Friday certaintly did pique my interest as a bear.

And it still could. I got myself into a few short positions about midway through this last rally (**much** too early) so I would love nothing more than for us to break down here.

But I still have dry powder, and am considering whether to add here (shorts) or to see if the scenario above plays out. If we get a bounce Monday and it doesn't make a lower low by the end of the day, I think the above scenario might be in play.

Thanks!.

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#6) On April 19, 2010 at 4:37 PM, kdakota630 (29.85) wrote:

"...but my guess is that we have an up day tomorrow." - KDakota630, April 18, 2010.

See?  LOL!

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#7) On April 19, 2010 at 5:00 PM, binve (< 20) wrote:

kdakota630 ,

LOL! I hope we are not keeping score, I would have negative points :).

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