Is The Top In?
This morning I woke up and read a few compelling pieces of commentary and news on the economy and the stock market. Most of them were very bearish providing more evidence of a coming correction.
Interestingly, the market opens lower and is now down over 100 points on the Dow. If the day continues as is, we’re likely to have the first significant down day in 3 weeks.
An article over at Seeking Alpha provides a really interesting comparison between the bear market rally of 1930 and the rally of 2009. The comparison of the RSI (Relative Strength) technical indicator is especially interesting in my opinion. The duration and gain of the rallies are almost identical.
Many are quick to point out that the policy reactions to fight the recession are very different today than in 1930 so we’re unlikely to follow the same pattern. Maybe. Maybe not. But, I’d tend to lean towards a definite correction rather than happy days are here again, especially as we get continued news of job losses and planned layoffs.
Whatever you predict will happen, we’re at a crucial point here and it will be very interesting to see what happens. As you know, I’m heavily short against this market. I sold 60% of my SSO position yesterday afternoon and got stopped out of the remaining 40% this morning for a small gain.