Sunday, October 3, 2010
10/3/10 Red October/Mr. October
Being lazy again, and copying/pasting my response to Bull Hunter-
Most of us aren't that great at forecasting more than an hour/day at a time, much less a month (don't meterologists have the same problem), but I'll take a swing at it.
The market (which is to say crowd psychology) is really no different from the weather- you see the same patterns repeated over and over. So I think the market sells off enough to test recent buyers, then ramps up to higher levels, leaving most of them behind. From a trading perspective, of course, the devil lies in the details. If you're going to be short, take profits when you have them. If you want to get long, wait for the inevitable pullbacks. Nothing new there- we'll see significant selling in October, which simply sets up significant buying opportunities (for swing traders, you may even see the perfect pitch). This take, of course, presumes we're going higher.
I think we are going higher. The 'pockets of prosperity' argument notwithstanding, I believe the next decade does in fact set us up for another Roaring Twenties. Things weren't great during the Seventies, yet there were no market 'crashes-' the indexes (from a zoom-out perspective) pretty much remained static. They may do pretty much the same for the next ten years- tread water while waiting for the economy to 'get it together.' I know it's easy to imagine Martians looking at the human race and thinking 'What a bunch of losers,' but most of the time we do get it together.