Financials brought this Market UP.
Financials will bring this Market DOWN.
We've been having a Rebound Rally from the horrible fears of Bank failure. OK, so many are convinced the Banks won't fail and their stock prices went back up. So how high can they go?
They can only Pump Financials up so high on pure speculation. At some point they have to show a significant increase in EARNINGS.
Yes! Remember that old fashioned notion? You know.... that thing where they have to show some decent PROFIT!
Less worse ain't gonna cut it going forward to higher highs.
I hate to say this tired old phrase, but the Market certainly will:
"SHOW ME THE MONEY!!!"
A risky bet that should be well rewarded in the comming days ahead.
I'm either too wise, or too cowardly to go All IN. However, I put in up to 80% sometimes.
Trading in and out of this Market is the best way to go, whether Long or Short.
Good Luck To You!
The problem is that they ARE making money hand over fist. As long as they get to ignore all of the crap assets on their books with the current mark-to-fantasy rules, banks get to borrow at zero from the government and depositors and invest it in the stock market. This creates a nasty bubble in equities that will end very badly at some point. Until that point comes, financials will continue to roll in the dough.
When? Of course, nobody knows. The Dotcom bubble went on for quite awhile, but that was in a Booming Economy when almost everyone had plenty of money to invest and speculate. Same thing with the recent Housing/Loan bubble.
Right now, these are not Boom Times. Quite the opposite. I don't think this Market speculation can last too much longer before people demand some credible earnings.
In the meantime, For ME, I think regular Investing is out of the question.
All one can do for now is #1. Just hold cash and wait for the crash. #2. Trade the Rally and hope to get out in time. #3. Trade the Market short.
I'm Trading in and out using a combination of #1 and #3. I might take a brief Long position if I see a special situation stock opportunity.
The leveled playing field in Stock Market has become no more, and we are closer to depression then we are to recovery, the news gets reported these days are sweetened for a taste of an unsuspected buyer. Expectations are lowered almost on hourly bases to make the news sound better. CNBC pumps this market as if they are on feds payroll and every foll watches & trusts these pundits. And smart money is still in this market only because the stupid money has not invested yet. Most of the buying and pumping of values are strictly superficial. Traders on the floor sell equities to each other, banks upgrade other banks and then in return they get the same upgrade in favor. So it's has become a joke. when they get rid of all of the bears this market crashes to the levels we have never seen before, and that is what is happening right now!!! they can not get people to invest and all of the lies about the money on sidelines are strictly lies. I read the front pages of NY Times from 1930's and it was exactly the same pump as we hear now, just as this country was slipping into depression, people were told that the crises were over and to start spending money,in the next few weeks came the CRASH!!! All of the bears were wiped out prior to crash, and only a few smart ones made money. We simply can not win on fundamentals right now, until they come into play, when that will happen? who knows as long as media is willing to suppress the real economic data for the fed we are dead.
One would agree, however, the markets have become a casino for the masses, nobody cares about fundamentals or technicals or real value, just throw the dice and take a chance...logic has no place in the U.S. stock market.
That is the classic attitude that takes hold before every Market crash in history.
True valuations are ignored, and people get caught up in the false belief that SOMEHOW, profits will catch up with overvalued stocks.
There is no better indicator of Market Tops than that.