Thursday, February 26, 2009

Still on the lookout for the Hulk.

Here is how an Incredible Hulk type rally can develop. It starts with some slight green on the screen...therefore the longs are not getting stopped out of their positions. Then some cash comes off the sidelines to start accumulating sending shares higher still. Shorts don't believe it and short some more but it doesn't work and stocks rally...this triggers stops from those short stocks. Individuals then stop calling the mutual fund companies with redemptions every day. Sellers stop selling because things are finally coming back. The trillions of $ on the sidelines starts to get itchy and coming in to buy. The fast money hedge funds see it going up so they are buyers instead of sellers. When does this scenario start to develop? It has nothing to do with news flow...we had a 1500 point rally a couple months ago when the news was still bad.