Very Short Half Life for Bears

“Here we go again.”

As I said yesterday when explaining how I thought turn out, “X and Y most likely would happen but….. in a normal market; this is not a normal market.”  With the break of Wednesday’s intraday lows of S&P 1300 there should have been a nice downside follow through.  Instead since 2 PM yesterday, the S&P 500 has gained 1.85% in a span of some 4.25 market hours.  We have seen so many “V shaped” moves since March 09, it is too numerous to count.  They come off good, bad or indifferent charts – and they don’t need any large amount of volume, as many have been of the low volume variety, further confounding any of us who started in the market pre 2009.  All that we know is what used to be a rare pattern has somehow become common.

My gut was shorts would scramble to cover Friday afternoon ahead of “Monday morning gap up” (and the move up would be far less intense than nearly 2% in hours) but even that was asking too much by 24 hours.  The half life of a bear move of any sort is tiny.

Bigger picture the S&P 500 has moved back above the 20 day moving average so short sellers had a level to bet against, and that level has been punctured.  Back to the daily melt up, until the action tells us otherwise.   If the market remains strong and finished out here or higher, the only hope the bears still have remaining is a ‘double top’ on a rally to last week’s highs and then some sort of reversal.  If not, off to the races…

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

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