Most importantly, DON'T buy anything right now. We're waaaay overbought, the market is being floated by only god knows what artifical means, and the next crash will happen. Wait for that day that's solidly into the next big downturn when everyone starts talking about the end of the world, no hope of a recovery, news is just getting worse and worse, and throw all your money at any big name that's taken a beating.
Short covering is my take. You have plenty of Roubini followers who thought the world would be ending, bought gold and shorted everything else. Roubini's S&P 500 call was the moment that marked the bottom for now, there were no sellers to take the market below 666. Right now there are enough sellers at 875 to keep the market here while shorts are covered for a loss.
I'd be really tempted to put on a put spread at 875, but I think this could hold much longer than it should just because of all the people caught the wrong way.
Agreed. That's the only theory I've heard so far that makes any sense. Notice the declining volume on the dow. Are the shorts almost done covering? Maybe.
The only problem I have with it being explained by short covering alone, is that both the Dow and Nasdaq have
solidly broken long term down trend lines. Is short covering really that powerful? It's only a small kink in the theory, but it keeps me wondering. I think the short covering rally is also being fueled by idiots buying into the hype, and funds pumping the market to keep the insanity going so they can maximize profit before they let it fall on its face.
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Topic: Investing Again (Read 6032 times)