Monday, April 13, 2009

What can we expect

I suspect quite a few bears are waiting for the next crash. I'm afraid they are probably going to be disappointed.

The crash last Fall was a once in a lifetime event that's not likely to repeat during this bear market.

Usually bear markets will stair step down gradually. Subsequent legs down will normally break to new lows by only 10-15%. The final move into a low can occur rapidly and one can easily miss it. Or they can stay short to long and get caught as the market roars out of an intermediate low (I suspect this happened to quite a few bears in March)

On top of that it's not easy to spot the tops of these counter trend rallies. Every one of them will be accompanied by the masses calling for a new bull market. Just like they are doing right now.

By the way the weekly cycles are starting to line up I'm guessing we still have three more major legs down in this bear market.

In case I haven't pointed it out before it's pretty tough to make money in bear markets. One needs excellent timing and a good bit of luck.

Bull markets are much easier and infinitely more rewarding, profit wise (shorts can only gain 100%).

Now if there isn't a bull market anywhere I will try to scratch out a living shorting stocks. Fortunately there is a bull market.

In my opinion capital would be much better deployed in the gold bull than trying to short stocks.