Monday, April 20, 2009

Six weeks is over

The "mother of all bear market rallies" has now completed its sixth week with a 30% gain. As I stated in March, I would give this market the benefit of the doubt for six weeks. I am happy that as someone labelled as a perma-bear, I was able to see this coming.

However, Adil Burney the forecaster was much better than Adil Burney the trader.

-First of all, I got whipsawed out of most of my longs at the end of March on the sharp 2 day pullback. Certain things caused me to think twice and I was not able to reenter my longs as the market soared in April, as I had expected.
-My few longs have stunk (gold stocks), but I feel very bullish in the long term on this, so I am allowing some leeway for these.
-The good thing was that I converted almost all of my US dollars to Canadian dollars
-The best thing for a bear like me though was that I did not short. I suspect that we will hear of a few blowups on the short side (30% in 5 weeks will do that) in the next few weeks.

Where do we go from here?

-I think the "easy move" (it wasn't that easy!) is over. I don't think that we test the March lows or anything just yet, but after 6 straight up weeks (with only modest 2 day selloffs) and 30%, a nice Fibonnaci 38% retracement may be in short order. That would take us to S&P790-800ish (or about 10% off the top).
- I am still very bearish on the intermediate and long term, but I am weary of shorting just yet, as we must allow for a further rally later this spring/summer. The problems in the economy are too deep and there is way too much bullish sentiment out there in my opinion.
-I will watch the action in the coming days and make adjustments accordingly.

1 comment:

Anonymous said...

Great advice

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