InvestBaboo

Why This Rally Is Unsustainable

This author is a real basketcase.

XL capital staged a rally to $9.84 from the low digits. To this basketcase author this is a 400% unjustfied rally. He would argue "What has changed in the fundamentals since March of this year to justify a 400% rally?" To those investors who remember seeing XL at 40 dollar plus last year it has barely begun to make up for the decline. These investors were probably shocked and aghast that a 40 dollar stock so quickly ran down to the single low digits in such a short timeframe. The same is true with all other equities the author talks about. The author forgets that these were behemoths once that were brutally punished by the market and have not recovered even to half their original value.

"THE MARKET OVER CORRECTED MANY EQUITIES TO THE DOWNSIDE AND NOW IS BARELY BEGUN MAKING UP FOR THE OVER CORRECTION." There have been significant improvements in the fundamentals that are helping the markets now put proper value on these devastated equities. While the market will not reward them with their 2008 highs (yet!) the market will certainly take them a lot higher than where they are today.

It is exactly this "Cup half empty" syndrome that creates suckers out of people. People like this author always think they are smarter than the market and always try to double guess and/or outsmart the market. There is a whole bunch of these sucker authors on Seeking Alpha who have caused their readers great disservice by influencing them to stay out of this rally. If this author and others like him had simply followed charts and then came up with a rationale to justify why the markets were rewarding the equities perhaps they would not only be wiser but also richer.

As for the author finding faults with the technical parameters of this rally there are thousand other analysts who will look at the same data and argue otherwise. At the end of the day the markets rule and investors are wise to follow the trend till the bend at the end.