Don’t be a sucker!

Euphoria is everywhere in the market, period! No one could believe that we’d see this kind of rebound just 2-3 weeks ago when the market was at extremely depression around 1800 for S&P. At that time the media was screaming Chicken Little but you may remember what I said: “No immediate crashto come….yet”! Suddenly it seems everything becomes rosy and we have solved all the problems worried by the market just a couple of weeks ago. The herd is in a panic buying, fearing that they would be left behind if not in now. What a sucker’s game! Don’t be pulled into this trap. We are still in a bear market and this is simply a bear market rally. If you have already forgot what had happened last Oct, just look at the chart below: we are exactly repeating the same bear market rebound and now it has reached a nosebleed extreme overbought condition! Virtually all the technical indicators have shown such kind of extremes and some of them are at the extreme levels not seen in years, e.g. the McClellan Oscillators for NYSE and NASCAW (NYMO and NAMO) being at the extreme overbought levels not seen in probably a decade!! This is kind of rubber band that has been stretched as extremely as possible and when such an extreme occurs, it will snap back for sure. That will really hurt when it happens. Try not to be the one standing in the middle when the rubber band snaps back!

 

Can the market continue to march higher from here? Sure it can. But one thing is for sure that each inch higher just increases the risk of a substantial crash that may happen any day now. If you are itching to buy now, just first set up a pain level you can stand.