Investing A Realist in Bull's Clothing By Timothy Collins Street.com Contributor 2/1/2011 6:16 PM EST
Down days are becoming more and more like alien sightings. A ton of people see them, but after a few days pass, they become more like lore and legend than actual events that can impact our beliefs or actions.
I'd like to say Friday is a distant memory, but I don't think the bulls will get off that easily. It appears that there are too many eager (but weak) bearish hands willing to jump in over their heads on the first signs of a big down day only to get stopped out even quicker than they got into the fray. The Russell 2000 still appears to be the most at risk of actually rolling over while the S&P 500 only seems at risk of a pullback to current uptrend support levels.
On the other side of the pond we find a somewhat similar setup. The iShares MSCI EAFE Index (EFA) is breaking out to new highs while the iShares MSCI Emerging Markets (EEM) appears to be even closer to rolling over than the Russell 2000. Even though many indices are still moving together, they seem to be on different levels and different paths. If so, that would be a refreshing development as it could lead to some divergence in performance or even direction.
When making a determination about going long or short, it is important to know your goals and timeframes. I know a few readers questioned my movement away from a bearish stance. Valid questioned presented to me in a very professional debate setting. I am not a raging bull, nor am I a raging bear. I trade. My timeframes are very short, so even if I think we are being propped up by some invisible hand sporting a cowboy hat and POMO chaps, it doesn't mean I can't jump on the horse for a quick dash. [Viele Profi-Trader wollen den Aufwärtstrend kurzfristig long reiten und glauben, schnell genug wieder rauskommen zu kommen. Das glaubten sie auch am 6. Mai 2010 - A.L.]
I don't plan on being stuck with the cattle, but the cattle are being well fed right now. Few bulls are being used for dinner at the moment. Being a trader with a very short time frame gives me a little more leeway when it comes to thinking about where the market is heading six months, or even two years, from now. I manage for today, tomorrow, next week and even next month, but beyond that, I want to have the ability to go with the flow. |