1. The market has run primarily on the back of the weak dollar and despite reports by reputed economist, the euro is struggling at the 1.50 level.
2. The market has had a great run not only in the resent month but it has literally has made a 'V' shaped recovery so far.
3. The large and medium caps have run hard but small caps have lagged.
4. Gold seems to be world's hedge of choice for any given scenario.
Was it the last run of the year? Will there be a holiday run? It easy to get bullish in this type of environment, every time there is pullback the market proceeds to make another high. Remember, every time the market does this, the probability falls of another new high being reached. A major worry has to be the HUGE divergence trade building on the US markets. (RSI is making lower and lower highs whilst the SPX is making new highs) . This will pull the S&P 500 back down to 1050 in the short term and possibly down to the 980 level in the longer term, no doubt that SA will follow. After a pullback to 1050 it is very possible for the markets to enjoy a December rally, we will just have to see.
I still believe that the real threat to our stock market rally will come in April next year when our reporting season starts. The run in the stock market has to backed by some earning, ...but what if they are not there? Just looks at WHL after their results this week!
* My favorite shorts to participate in the down run are AGL and the banks.
* If you be so inclined to hedge, do so with BIL and insurance/apparel retailers.
Welcome Bru!
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