The contrarian in me sees a story like this about the "troubling aspects" of the recent stock market rally, and my gut tells me this 2009 rally is the real deal. After all, true rallies are built by climbing over "walls of worry" -- and this story is filled with worry.
The story points to inflated valuation, and that the good news is "priced in," but let's throw that worry out the window: Valuation didn't mean much during the last bull market run.
With the VIX "elevated" over 25, let's throw that worry out the window: The fact that it's down from 40-80 is good news for rally lovers.
As for low volume plus short covering driving the rally, yeah, that's possible. I can see the argument that the rally is driven by technicals rather than fundamentals. But even so, if the retail side thinks they're missing the boat on this run, their money pools can quickly add fuel to the rally -- whether it has any fundamental basis or not.
Personally, I've continued to sell into strength and stockpile cash for the next dip, because regardless whether the rally has legs or not, there will be an inevitable fallback before the end of this year as people "lock in" profits and/or react to some external bad-news event. It's at that point when we'll get a much better snapshot of how strong this market really is -- and whether it's time to buy back in or keep cash on the sidelines.
No comments:
Post a Comment