Trading Against My Long Term Opinion

Good morning. I believe that the market remains overvalued and that it will take many years for the economy to heal. However, a confluence of factors have lined up for a short term market rally.

The market has become oversold and sentiment has become too bearish in the short run. The bearish sentiment is evident from the put buying for a string of days. This has laid the foundation for a rally. The closing of the Merck/Schering Plough deal, which had an $18 billion cash component, and Berkshire Hathaway's part cash buyout of Burlington Northern have given the market the push it needs. I would expect a rally to last a few more days at least.

1 comment:

Anonymous said...

I'm trying to sell half of my exposure at the least here dawg. I will be extremely surprised if the mkt continues to go up.

I will again only buy the beat down plays as usual, but if the mkt keeps going up, I am not chasing it. Rather, I will again play the 3X leveraged bears once I feel the mkt gets out of hand again. If it does... but I think this is against the odds.