This bus to Bull Town is fully loaded at THE BOTTOM

Need some passengers to get off to get to the Bull Town Mountain Top......

Maybe a few traders here.

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

Ask Mark Young (our fearless leader),he is the sentiment expert.....

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

There are always buyers from somewhere. The point really is that at the point where everyone expects it to go down, the sellers have exhausted their supply - shot their wad, as it were. Who would still be holding stocks if he expected them to go down? No one. Absent supply, conditions are then right for an advance.

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

There are always buyers from somewhere. The point really is that at the point where everyone expects it to go down, the sellers have exhausted their supply - shot their wad, as it were. Who would still be holding stocks if he expected them to go down? No one. Absent supply, conditions are then right for an advance.

Folks are holding massive loss here.....The brokers are holding their hands and tell then to hold for the long term.....What if they panic and throw in the towel?

Every regular person I know is adding to their retirement fund. Its quite insane, no fear.

No. What will happen is that the rallies will be sold because everyone believes that worse times are just around the corner. FWIW, this site gets loaded at bottoms with some regularity. The volatility however can make it tough to interpret the sentiment and who's a fade and who's right. And when! Mark

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

Two reasons I look for -
1. Short covering - down momentum has petered out, or its late in the day, or friday, and shorts want to lock some profits in so they cover - the act of cover a short causes a rally, and the rally causes more shorts to cover...and a feeding frenzy rally occurs....then, longs regain some confidence and go long...usually just in time for a top! ...we've seen this endlessly the last month. FYI - hence the lunacy of banning shorting.

2. Smart money aka 'da boyz' decide to buy....they are not 'everyone', they are FEW but with very deep pockets and CAN and DO move the market in their direction...at least temporarily....if they can't then get 'everyone else' to bid up prices...they then dump'em just as quick ...usually after faking a strong market close or mini-gap up to sell into....gotta' love 'em.


FWIW - everyone most certainly is not bearish according to most sentiment measures I use..and that is alot...just take a look at AAII, ticker sense, Rydex, put/call, FF ( insane bullishness here on every possible low the last month down )....odds lotters...infact, the only bearish group are the newsletter writers...i'm talking level of bearishness RELATIVE to PRICE...you have to consider what is occuring.. context is everything.

best,
Mark.

Edited by entropy, 23 October 2008 - 09:02 PM.

There is one thing I do not understand, a lots of people are saying the market could not go up when most people are expecting a rally.If most people are expecting market to go down, and no one is buying, how a rally can happen?

Two reasons I look for -
1. Short covering - down momentum has petered out, or its late in the day, or friday, and shorts want to lock some profits in so they cover - the act of cover a short causes a rally, and the rally causes more shorts to cover...and a feeding frenzy rally occurs....then, longs regain some confidence and go long...usually just in time for a top! ...we've seen this endlessly the last month. FYI - hence the lunacy of banning shorting.

2. Smart money aka 'da boyz' decide to buy....they are not 'everyone', they are FEW but with very deep pockets and CAN and DO move the market in their direction...at least temporarily....if they can't then get 'everyone else' to bid up prices...they then dump'em just as quick ...usually after faking a strong market close or mini-gap up to sell into....gotta' love 'em.


FWIW - everyone most certainly is not bearish according to most sentiment measures I use..and that is alot...just take a look at AAII, ticker sense, Rydex, put/call, FF ( insane bullishness here on every possible low the last month down )....odds lotters...infact, the only bearish group are the newsletter writers.

best,
Mark.

AAII is on a Buy, Mark. Not a strong one, but a Buy nonetheless. TSP Talk has 62% bears as of this afternoon. It was more this morning. The options guys are buying puts, too.

We'll see what our sentiment looks like tomorrow morning.

M