I am ALL IN bearish right now and once again I stand-alone as the sole disbeliever in the Bush pseudo-economy. The on-again/off-again bearish folks over at Elliot Wave International went briefly bearish again this past summer calling the July top "THE Top" (of course they also called THE top last July, 2006 and then there was THE March 2007 top, etc). But now that the Dow has broken out to a new high for the year the sorta perma-bears have CAPITULATED and are now calling for a "running triangle" (whatever that is) and a new high toward the end of the year.
I don't think so - no running triangles for you, Mr. Elliot. Me thinks that this Fed-induced rally off of the July 2007 lows is a poorly disguised fakeout with all of the attendant signs: low volume, weak internals, non-participation by key sub-sectors (transports, small caps, financials) and mass bullish complacency as evidenced by the EWI capitulation. As of this writing, the S&P 500 has not yet eclipsed its July high for the year, despite the giddy press surrounding the DOW's new highs on the year. The key difference is that the S&P 500 is much more representative of the broader market than the DOW.
Let's recap: First the market dropped hard in July, pulling in the bears. Then, thanks to the Fed "surprise" rate cut (apparently no surprise to those who massively bought S&P futures just prior to the Fed announcement), the market reversed straight back up off the August low, climbing vertically back near the all time high -blowing out those bears and making the bulls feel vindicated and invincible. So what can the market do now that would inflict max pain on max people? Reverse hard down and never look back...
