It is no coincidence that just as the "Don't Fight The Tape/Fed" chatter grew to a deafening roar that the tape has finally had a decent sized pullback. I am not a big fan of blanket statements like "Don't Fight The Tape". There is a time to fight the tape and there is a time to go with the flow.
The time to fight the tape is when the crowd has given up fighting the tape. Heading into QE II sentiment was bullish but many were looking for a "sell the news" reaction, so there was a contingency that was still fighting the tape. After QE II a stampede ensued and financial media and the blogosphere were lit up with the "Don't Fight The Tape" meme.
Part of knowing when to fight the tape is anecdotal, like paying attention to the fact that many were looking for a "sell the news" reaction to QE II. But one must also have some quantitative measures as well. I like to use sentiment surveys, put/call ratios and the Rydex ratio to make sure that my biases are not coloring my view of sentiment. In addition, I always look at the same indicators so I cannot pick and choose the ones that agree with my view.
All the indicators I look at were at or close to a bullish extremes at the beginning of this week, signaling that it was probably a decent time to fight the tape. Trading slogans like "Don't Fight The Tape/Fed" are a dime a dozen and when everybody's chanting the same one they are worth even less.