Wednesday, September 16, 2009

That Freight Train You Heard Was The Buyers Rushing To Buy

We had a couple minor dips during the day, but they hardly deserve the name. It was up, up and away, with small banks and big technology leading the charge. My AAPL stuff did extremely well today. Breadth was very strong, volume heavy, and the only sector that looked a bit shaky was semiconductors.

What is most notable about the action now is that the bears aren't even trying to call a top. They are just shaking their heads in disbelief at the persistent strength and trying not to get run over.

I read of a trader who characterized the position of many in this market by saying, "I can't find much to buy that is new, and I'm underinvested." It isn't that there are a lot of bears, but there are a lot of folks who have been slow to embrace the market after the pain of a terrible bear market, and they now can't find a way to jump in. They kept cash levels very high for a while, and trying to deploy it in stocks that are technically set up and/or a good value is tough.

One of the repercussions of this situation is that we have a tremendous amount of underlying support. This market is going to pull back, but it isn't going to fall apart easily. There are just too many folks who missed out for too long who will keep looking for opportunities to jump in.

Straight-up markets are a lot harder to trade than a casual market observer might think. Buying and holding is what works best in a market like this, but that is exactly the approach that resulted in huge losses last year and early this year. It is a constant battle between doing some disciplined selling, making prudent buys and letting things ride as the momentum continues. In this market, doing anything other than being fully long and holding has been wrong, and that is why frustration is so high....

long AAPL

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