FROM THE ARCHIVES: Market Direction and Sentiment Fetishists

I’m on vacation this week, but I wanted to dig up a piece from the last bottoming period.  This classic is from those crazy days in early July 2010.  I feel the current market is in the same collective head space as back then, and we’ll most likely end up with a similar result: higher prices in the market.  I’m still pulling the same old boring Drudge headlines for sport.  Ha! Some things never change.  Enjoy.


I try not to get too caught up in the drama of market direction.  The market has been a meat grinder lately, and this is exactly why I trade spreads.  But sometimes the sentiment gets so crazy in one direction that you have to take notice.  Usually right around the time that CNBC starts booking their favorite permabear guests the market is due for a bounce.  I’m never going to make bold forecasts about where I think the DOW will be next month, but I want to highlight just how bearish EVERYONE got into the latest lows.  When every “market professional” is either on TV talking about how bad things are or calling reporters to plug the latest bearish statistics, how many more sellers are left to continue selling stocks?  What you think those guys got short after their TV appearance?

I did take the opportunity to skew my portfolio to the long side.

Click here for the Drudge Report screen grab, and here for the original Twitter post.

And yeah, follow me on Twitter.

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