IMHO, the reason TA and other more esoteric methods of market prognotication are floundering is that since early July the Fed has pumped over $3T into the market through GS, JPM, and other big investment banking fims, and the retail trader, seeing the effect and hearing the daily propaganda of the Obama lackeys and the CNBC hacks, has drunk the Kool-Aid and now believes it is safe to get back in the water.
Additionally, has anyone noted the historically low value of the dollar in the FOREX lately? Also, you might note how the price of commodities *and* stocks have had an inverse relationship, which is a clear indication of the "dollar/inflation" trade. This should come as no surprise as any Keynesian will tell you that the only way we will be able to pay off our burgeoning national debt is with inflated dollars.
Accordingly, a dip of any consequence is merely seen as an opportunity to move more money back into the market at a better price. However, note that per the link on a previous post, insiders of many different companies are *not* buying, I think because they know 3Q will be horrible and would prefer the retail traders be the bagholders rather than themselves. This sort of "managed market" cannot go on forever, since the statistical market forces (OB/OS) will eventually reassert themselves. It is like a spring which is compressed to the limit, and when the external force is removed, responds violently in the other direction.
Meredith Whitney says housing prices still have another 25% to decline and the impending defaults in commercial real estate loans and adjusting jumbo and "Alt-A" mortgages will make the subprime mess pale by comparison. Finally, with *official" unemployment at ~ 10% (it is actually much higher due to many who have taken part time work, benefits have run out, or have just stopped looking), the outlook for a return to pre-crash levels of consumer spending, which is 70% of the economy, is simply not credible. When people have lost their jobs or are fearful they might, they stop spending on everything they can except for cola and beer.
So, for those still happily buying the daily tops, enjoy the run while it lasts, but don't pat yourself on the back too much for your market acumen and it would be advisable to keep your stops tight. The far greater risk in the market at this current P/E valuation and extreme overbought condition is in being Long vs Short. When it happens (and will most assuredly happen), the decline will be far swifter than was the grind up.
