Let The Market Tip Its Hand

Jeff Cooper at RealMoney sums up his market view the following way:

"...consider that the S&P was 9.3 times trailing 12-month P/Es in 1984. That's vs. a hefty trailing 12-month P/E today of 28. That's rich. But, what's really rich is that this is not an easy market to trade at the moment. The market is currently marked by low conviction while at the same time there is little tolerance for more than a few days to the downside. Apparently, the bears are worn out while the buy-and-hold bulls are content to sit until someone or something upsets the apple cart. Conclusion: This seems like an ideal time to play it close to the vest and observe until superior setups show up and the market tips its hand in a convincing way. It usually does."

There is much to be said about letting the market show you the way. I suspect that we'll see several weeks of volatility, before ultimately moving higher. This is a market where most of the bulls simply refuse to sell unless there is some reason that will motivate them to do so. And, this resistance will likely bring out the naysayers again, like Jeff, who believe the market is greatly overvalued. What the sell reason will be, and the timing of the delivery of that, is the billion dollar question. It probably will come from a source unknown to us right now, which makes it even that much more difficult to plan for.