Bears Still Waiting

The ability of the DJI and other indexes to avoid the death dive has led to much confusion in the bear camps. Now we like to poke fun at the bulls, but the bears seem to be perpetually abused by these markets. Each time we have seen the market on the brink of destruction, (Aug. 16th, Oct 22, and Nov. 1st) the final whack fails to appear. Comparisons to various years where hard breaks or crashes appear are being made daily. The credit crisis and the toll on banks and brokerages are claimed to be clear evidence of impending doom. Since economic strength in world financial markets is continually credited to the shaky global growth story, one cannot help but feel vulnerable to the downside. After all, global growth is all about commodity prices, and if anything can turn to crap quickly it is any commodity chart. But the bear's problems stem from their inability to close below levels, such as last springs lows, which will bring out meaningful liquidation and not merely downside volatility. Now the NQ has significant buying interest by managers simply for being a relative value play compared to other indexes. But interest in that market here and abroad is the overall reason the market downside has been limited. Turn the techs down hard and the bears may just get their break, otherwise forget it.