Thrilling Thursday – Topping or Popping?

July 8th, 2011 | by Alexander Zepps |

Is it time to turn bullish?

We went back to mostly cash (still bullish in our long-term positions) last Friday (see “Stop the Rally, We Want to Get Off!“) and the markets have gone up like a rocket since then. Sometimes I feel like I am the only person who remembers 1999, or 2008 or May while everyone else just jumps on the momentum bandwagon to go along for whatever ride is in play for that day. Sure we do plenty of momentum trading ourselves but thats not investing its gambling and never let yourself be fooled into thinking otherwise.

Even the people who interview me ask the dumbest questions totally focused on the moment with no big picture perspective at all. I suppose its all encouraged by the superficial nonsense that passes for news on TV and the WSJ is becoming a comic book too but the Financial Times and the New York Times still write actual stories if you take more than 60 seconds to get past the headlines.

Things are neither fixed or broken in minutes or days for that matter. Just because the markets CAN move up or down 5% in a week, doesnt mean that they should and it certainly doesnt mean the VALUE of the stocks has moved up or down 5%. Do they companies suddenly make 5% more or less profits than the week before? Do the companies make 5% more or less sales? No its all conjecture and extrapolation taken to a manic-depressive extreme driven by a 24-hour news cycle that needs to pump the greed and fear machine to keep you watching and reading and most of all TRADING because panicking you in and out of positions on a daily basis is making the brokers record profits and a return to buy and hold by investors would wreck their business model.

What did we talk about just yesterday? 95% of the days trading activity is TradeBots and Day Traders. The lunatics have truly taken over the asylum if thats the case when you are looking at a market that is 95% MANIPULATION and just 5% VALUATION. Manipulation works great in the short run but, in the long run valuation is real and it gets realized one way or the other.

For example, on Thursday, April 22nd, I titled my post “How to…

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