Saturday, April 05, 2008

Counter-trend Rally

Charles Kirk's daily trader's blog is among the best around. He compares the current market strength to the counter-trend rallies in 2001. Kirk says:

Counter-trend rallies always suck in people at the worst times as people think the “all clear” signal has been provided:



Kirk continues:

We could very easily see a similar situation here although history never repeats exactly (that would be far too darn easy). And, many will also legitimately argue there are major differences between now and back then (like reasonable valuations for example). However, at the end of the day, the market itself must ultimately confirm whatever thesis you’ve aligned yourself to.

All in all, I expect we’ll see a series of powerful and impressive counter-trend rallies that are worthy of trading short-term but extremely dangerous for those investors who like to hold stocks for more than just a few weeks. Most everything I continue to see confirms this so far.

Be careful out there.




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