Markets climb on a wall of worry and fall down a cliff of Joy

Companies are reporting higher profits, supposedly more people are getting jobs and as a result those that stopped looking for jobs are now more optimistic about landing a new job, Consumer sentiment is improving, retail sales rising, unemployment insurance claims are down and the list goes on.

So why is the market falling; perhaps the market has already priced in all this, and it needs something more to power it. Perhaps it also senses that all this so called good news is just a short term development and that the potential for extremely bad news is rather high. Before the correction started to gather steam we warned that the lack of volume was a sign that all was not well. Precipitously low market volume a sign that a correction is imminent, May 5, 2010

Bottom line; tread carefully as this market is extremely overextended. The action of the past few days clearly illustrates that the market is falling down a cliff of Joy. Mass psychology dictates that the best time to buy is when there is blood in the streets and the best time to sell is when everyone is celebrating; its time to take a stand or risk falling down the lemmings.

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