Amazing Momentum

The momentum does not cease to amaze me. When this market goes up it goes straight up and when it goes down it goes straight down. There is no in between. Quants?

3 comments:

PJ said...

It is amazing. I thought after we went through two such bubbles in 2000 and 2007 people would be more value-oriented and less momentum-crazy. Turned out to be the reverse.

Of course government policy has driven the bubble-crash cycle. Most people seem to want to join in the bubble part, which of course exacerbates the crash.

Anonymous said...

You've been flinging around those "support at" and "oversold/overbought" phrases so long it has affected your ability to think. Get back to the basics. Greed and fear rule the market, and of the two, fear is dominant, because most greed is nothing more than fear of underperformance by professionals. The fear of underperforming by not being fully invested has switched to fear of losing real money. Fear, fear, fear.

I've been reading this blog for over a year and you were of the opinion back in March/April 2009 that "fair value", not great value, mind you, but merely fair value, was about 900, give or take 100, on the SP500. Add in some inevitable undershoot and the only real support is somewhere south of that fair value level, say 800. All this talk of 1150 support, 1050 support, etc, is just nonsense. It made no sense to cover your shorts. Cut your losses and let your profits ride.

Onlooker said...

Wow, just wow.

I've got to admit that as much as I expected a healthy correction, this is beyond belief. Clearly the big bears had been chased out and there was nothing to stop it once the big boys and computers started selling.