The level of pessimism in the market regarding the ongoing European Union drama, the Euro currency, China slow-down, BP (BP) oil spill, etc. etc. has reached a point where all the sheeple who are easily frightened (aka the weak hands) have already folded in despair. The MSM pundits attempting to drum up stories and fear by constantly bombarding the common investor with negativity have done their job. The market is down ~14% from it's highs recently. I now forsee a current period of consolidation which will be followed by a push upwards to new highs on positive macro/global/economic news. In particular: A perceived 'solution' to the European crisis and positive economic data here in America will provide legs to a new market rally.
As astute investors have seen throughout history, being a contrarian is the surefire way to outperform the averages. When the market kept breaking new highs on flimsy premises I kept buying more VIX at multi-year lows. When the market rolled over and the commoners panicked I sold my VIX (VXX) for a nice profit and floated bids out on companies I wanted to own long-term at prices I was happy with. I have since filled in many of my positions and am currently profitable in the majority of them.
For the medium term, I see catalysts that will provide the stock market legs will be:
The devaluation of the U.S. Dollar, coinciding with a possible rally of the EURO and the eventual appreciation of the Yuan (Renminbi). The amount of U.S. Debt is staggering and eventually we have to inflate our way out of it, and/or yields must go higher to reward the fools who would even consider buying U.S. Debt.
The coming rotation out of bonds and into stocks, commodities, and other asset classes. It is widely known that
