Feeling Great

The current sentiment of market participants can be described as feeling invincible. The bears are in deep hibernation, not even trying to put up a fight. This type of market is very frustrating for me because I'm too scared to buy or short.

Ideally, I like to do my buying when stocks are cheap. But since that has rarely been the case over the past decade I compromise and buy when fear and skepticism are high. It is hard to recall a period when fear and skepticism were lower than at the current juncture. While it may feel "easy" to buy right now I have found that such rallies often end with abrupt losses where the gains are taken away far quicker than they came.

At the same time I can't bring myself to move to a significant net short position. We are likely to see another week of record low volume. It will be easy for those with an agenda to push the market around.

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