Essentially trying to ply trades based on market sentiments, in what would seem like a market ‘herd mentality’. True enough to the predictions and observations of some, there seems to exist a ‘Friday effect’ where the market tends to close sharply up at the end of Fridays. It may be due to buyers wanting to finally take up positions after a whole week of thumping lower and lower. And possibly sellers, thinking rationally, that the buying frenzy usually spills over to the following week before fizzling out, thus holding back their sales although in today’s example the sellers came out in force in the final 5 minutes to prevent a total uprush. But the result was still impressive nonetheless: a full 500 point gain in the final trading hour alone. Pretty significant considering its a pull up from a lowly 7500. Then again you can argue that 7500 is too low for the index to stay over a weekend, and I’d even tend to agree somewhat.
Regardless, I still feel there is still some room for upward movement before the Dow succumbs again to the rudderless uncertainty it has been facing all weak. If there was one thing to takeaway from this week’s market, it is that the market HATES uncertainty. And is willing to pay a premium (in terms of realizing losses) to get the hell out. Sounds like something we can make money out of.
Hopefully the stars will align with some good hope-inducing news over the weekend, so that the index will continue to get swept up in irrational exuberance at least for part of Monday, or even better, part of the upcoming week. I’ll be watching closely to finally wade in with some short positions. They should be great companions in an overall monster-bear market.
