Calling this rally “hated” is trite. The savvy investor transcends labeling and quickly moves to create a conditional plan for profiting whether the rally fades or continues.
This week, widely-followed market pundit Doug Kass said “the market has likely topped.” Although Doug makes a solid case, we have been seeing these rationales for a very long time. So, I take it Doug is now adopting the bear case because he sees something significant in the technicals.
If Doug is correct, we need to see the market fade on increasing volume to prove buyers have been exhausted. However, as with much of the rally thus far, each time a wave of fickle short sellers rushes in they become overwhelmed by buyers who salivate when the market dips. Until this pattern changes, the game plan remains the same.
As usual, don’t blindly follow anyone’s predictions. Simply monitor the supply-demand ratio at critical levels to determine whether shorts will end six straight months of incredible pain.
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