Market Slapping Me Out of a Bearish Stupor

I have been so bearish that I didn't want to post on the blog, pick stocks, or even get out of bed in the morning. However, I've finally seen some signs that have shaken me out of my bearish stupor.

The Henry Paulson news Friday morning, Bernake's indication last night that he's cutting rates again, and the equity investments in troubled banks over the past weeks, are the first indications that regulators and investors are getting ahead of the credit problems, not just trying to put out fires that have already sprung up.

In addition, the technicals are turning up from very oversold levels. The NYSE and NASDAQ bullish percent indicators have turned higher from levels that have typically marked bottoms in the market.

And the "dumb money" is bearish, while the "smart money" is bullish according to Sentimentrader.com.

All of it says to me that this is a market in which to buy the dips, not sell the rallies. I'm not predicting a return to the old highs this year, but I'm guessing the market can chop higher for the next month.

Comments

[User 126833]

With the decline of home values, the consumer addicted to credit does not have any means to access the extra cash, in the abscence of fraudulent transactions the financial institutes have no way of making profits. In an environment when banks wont even lend money to other banks how do things turn around.
I think paulson deal will not solve the problems, many people are choosing to walk away from homes with negative equity. If I owe more than a 100k on the house than what the house is worth, why would I make payments on it.

[User 126833]

With the decline of home values, the consumer addicted to credit does not have any means to access the extra cash, in the abscence of fraudulent transactions the financial institutes have no way of making profits. In an environment when banks wont even lend money to other banks how do things turn around.
I think paulson deal will not solve the problems, many people are choosing to walk away from homes with negative equity. If I owe more than a 100k on the house than what the house is worth, why would I make payments on it.

[WAKEUP]

Where's the beef? Rate cuts won't make any lasting difference; "equity investments in troubled banks" is just a prop-up, et. al. A major cause of the present situation is simply that houses are grotesquely overpriced, and until they free-fall to the level of what they are actually WORTH, no amount of rationalization is going to make any difference.