Stock Market Is A "Buy"

I am a bit reluctant to say this, but stock market flashed a buy signal. From the beginning of this rally I've been warning that this is just a normal bear market rally. These often come on surprise, driven by short covering. They usually extend very quickly to an unbuyable overbought areas and they often start on low volume without any strong accumulation on the way up. These are all characteristics of the current rally.


However, even in bear markets, intermediate cycles usually don't top in just three weeks. Most often it will take 6-8 weeks to reverse the bullish sentiment, created by a false rally. At least that is the case in the early stages of a bear, when many people are still optimistic. Anyway, Thursday's dip was obviously bought and now we should get in the stage of "buy the dip, sell the rip" type of action as smart money starts to swing trade, distributing their shares into every break to new highs and not leting prices fall too much. Most breakouts will fail in such market and the best strategy is to buy high quality names as they pullback into support areas and sell them into 10% plus profits. Eventually, as enough weak hands buy these fake breakouts, smart money will stop buying dips, which should pull the rug below market's legs.