The-Yellow-Rose-Street-Beat

Act Now, It's the Psychological Rally

This is a well written article. It's interesting that before seeing this article I had just written a blog on how this rally was primarily fueled by market psychology. Q1 was over and it was New Year's Eve...

This rally will probably show some legs. Everyone wans to call a bottom and bears are appearing to others (even if they end up being right) as either negative or afraid or both. The fundamentals of a credit crisis that deals in derivatives that are many many times the global GDP will not wash away just like that. I can't even picture somebody saying that if they understood how deep this thing is.
However it is also true that some good companies with international exposure and/or in industries not affected by the economy have been sold down too much because nobody wanted to buy any stocks that would just turn around and go down the next day. These will shine. Eventually the wheels will come off the overall rally and it may happen before the summer, depending on whether there are any more shocks/bankruptcies. In one second the euphoria would fade.
For now though it is a good time for me at least to pare short positions and go long but believe me this will continue to be a profit taking market with large swings because the guys with the big money know that the fundies are not all good.