Double talking Sam

A lot of charts look like this. Closes well above the upper bollinger band. Too me it looks like a late inning blow off. Markets often move in one direction longer than seems possible or logical. But we all know that they do.  And that's what I think is happening now. What's causing the blow off? Economic data and earnings have been better than expected. But it really comes down to the psychology of the insitutions who influence and set the stock prices. Mutual funds and pensions funds are getting back in. Running scared in the name of relative performance - the yard stick of incompetents. I think they were sitting on the sidelines w/ their doomsday opinions, and for the last 6/7 weeks the market went against them.  They are almost always wrong at the turns and I don't think this will be an exception. . In the beginning, the the brain trust was confident; 1) waiting for a new low, 2) a test of the low, 3) claimed it was short covering, 4) argued that the economic reality did not support raising prices, and so forth. You read the WSJ, marketwatch, etc... and the constant opinions from the so called experts. We've also got the other rats coming out of their nests making  rounds.  This clown (double talking Sam) is popping off:

....... several strategists say in notes that they see stocks still moving higher. Citigroup's stock strategist Tobias Levkovich warns the market's naysayers could be proven wrong, and this could be an above-average bear market rally.

Levkovich said a few metrics have encouraged him, including the prospects for a likely earnings recovery for late 2009 and 2010, and an improvement in bank lending standards, likely by late 2009. Another positive is a likely moderation in inventory reduction, which would create a production pickup and that would help earnings. - cnbc.

The strategist vermins' job is to go on TV and drum up commission business for the street. They'll surely get some folks to drink the newly made kool-aid. They always do. Fear and Greed. people and their emotions never change. If you're not in, it's tough watching this thing run away without you. It's so tough to sit and watch that  some folks have to join in. The temptation is too great. Usually w/ dire consequences and certainly  piss pour timing. 

Anyway, here's the chart from April 9th. Today's close is the red line just below 8500. we've now punched into this big heavy resistance area Trading Range. For the Dow Industrials to give a bullish signal, my belief is that a close above the Nov. 4th close of 9625.68 is required (red arrow). The transports would also need to confirm (not necessarily on the same day).

This run up has been great. Happened!!  For me, it appears to be getting a little long in the tooth. Remember of the 3 trends -  the most deceptive is the secondary reaction, which is what I think we're dealing w/ right now. This sucker could be dangerous.  Bottom Line - the risk reward stinks. 

I've been selling longs into the strength. A while back I picked up a nice representation of once pretty good names selling in the single digits. Companies like CBG, AA, IP, GCI, URE, FITB, MTW. Kind of along the lines of John Templeton after the 1930s massacre. So far so good. I plan to hold these through the recovery - whenever that is. This move is likely part of it. I've added to my hedge today using the DXD. My objective is to eventually get long a bunch more of these cheapies. That's where one could really out perform the market in a big way. There will be some 3, 4, 5 baggers in there. Some will go bankrupt but not all. There are so many still. My positions include being long TLT put on Friday, long DZZ,  GS short late today and BNI, short AAPL last week.