A few weeks ago when volatility was really picking up and the markets were falling it seemed like many people were calling for a short term bounce in which they wanted to establish short positions. Well now that we’ve bounced over the holidays it doesn’t seem that traders have held onto that bearish bias. In fact, my twitter stream seems to be loaded with bullish traders or those who are bearish but afraid to commit to any positions. And then there are those Apple traders who feel that stock is going back to $650+ which in fact would propel the general markets higher if that were to happen. So if your bullish on Apple you’re essentially bullish on the general markets. In other words, if it’s unfathomable for Apple to fall then you don’t believe the markets are going to fall, which gives you a bullish bias by default.
I remember at the bottom I felt the markets would bounce as well and was a little worried because so many shared my view of shorting the bounce. But now that the bounce is here it seems that very few are shorting it which gives me a more confidence that the markets have hit a short term top.