Dana Cole

Sell Side Still Sees S&P 500 Up 20% by Year's End

I should probably resist the temptation to post a comment twice, but it fits this article better than the previous one.
To proceed upwards, we need a really good flush out on the downside. We are not getting it because diehard contrarian buyers are weakly holding prices up. If all today's sellers held back for a week or two, these would happen:

Buyers would be picking up stocks at truly "bargain" prices.

The huge crowd of people out there waiting for a "test of the January lows" would have already had it.

Levels of pessimism would match those that characterize bear market bottoms.

As it is, there's not much room for rallies, since so many folks are scared and trying to get out.

No Bear Yet? Average Stock Already Down 30%

The problem as I perceive it as that we need a really good flush out on the down side, which we are not getting because diehard buyers are weakly holding prices up. This is the same as saying that we have not quite reached the level of pessimism that characterizes bear market bottoms. If most of today's buyers were to step aside for two weeks, they'd find themselves buying at levels which would all but guarantee them great profits. The same cannot be said for sellers holding back, however, since everyone still seems to be looking for a "test of the January lows" and not a rally upwards.