Tuesday, July 28, 2009

The Strength Continues

This market's amazing strength continues. We had a midday dip but the buyers jumped in and took us right back to even at the close.

The upside momentum has slowed a little but the frustration levels for bears and underinvested longs who want this market to correct a bit after a huge run must be sky high. We just aren't seeing any notable pullbacks in one of the most overbought markets ever.

I liken this market to walking a high-wire. We are way up there and we have a few wobbles and little jiggles but we just keep putting one foot in front of the next and keep on moving. Every time we slip we quickly regain our footing, which gives us a lot of confidence.

At some points we will start to wobble more and eventually we will slip and fall enough to suffer some pain. However, there is no sign of faltering yet and we shouldn't anticipate it as long as we are steady. Yes, we are way up in the stratosphere, but that doesn't mean we are suddenly going to go straight down.

This is a very tricky market to navigate, but the easiest way to be hurt lately is to be overly cautious and keep looking for downside. We certainly have to be taking some profits into this strength but being overly aggressive with shorts is the real danger. There will be a time to press the short side, but it isn't when the dips are so shallow and only last for a few hours....

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