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Many players are haunted by the specter that it’s 2003 all over again. Well, I guess it’s only the bears' lair that's spooked.
After that exhaustion low, when the market became overbought and the normal expectations according to all the overbought indicators and bullish % etc. etc. etc. pointed to a resumption of the bear trend.
All except Swing Chart Theory. When the monthly swing chart turned up and stayed up and defined a low on every turn down, it was a signal that something was happening and the bulls knew what it was -- Mr. Dow Jones.
Then there was also the small detail of balance. When the S&P
and Dow Jones Industrial Average
recaptured 50% of the decline, they were in a stronger position and the idea of a test of the highs was worthy of more than consideration.
My view is that that was then, this is now.
Someone sent me an email saying that they love Minyanville, but that there have been more than a few professors, including myself, who have been crying wolf and been wrong about the rally.
My recollection is many of us who are looking for a top -- and admittedly have been doing so for the last month -- were spot on about a low forming in March that would lead to a bigger rally that we had yet seen in the bear. In fact, my comments in February targeted March 10 and I offered that the first thrust should be at least a 1,000 DJIA points within weeks. I thought there was a good chance that the 3-month rally high in June may have been a more significant top, but did identify the first week of July as a major turning point. I was dead wrong about the idea that the rally off that low would only lead to a test of 950. I didn't see 950 being captured. When it was, a three-eighths retracement of the bear to 1,007 to 1,004 became a projection.
The reason for the recap is that as I learned from someone much smarter than I that it's one thing to have an intellectually bearish view and another to make a bearish bets.
My report has had many long side plays over the past months -- even today it was leaning long. As I said in my report the other day: “I have been in the game a long time and learned years ago that only the jumble survive. The market is a terrific arena to disabuse oneself of any illusions of perfection. The truth of the matter is that it is not necessary to be perfect to obtain excellent performance. And therein lies the rub: Do you want to be right or do you want to make money?”
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