Contrarians tell us that when everybody piles on to one side of a trade it is time to go the other way. The "boat" of the market listed way to the bearish side yesterday morning and it was no wonder - the news was absolutely horrible. Intel troubles, GM failing, economy faltering, credit crisis, bailouts, housing crisis, worse than expected retail sales, worse than expected job losses, and on and on.
Stocks undercut their October lows and it looked like the bottom had fallen out.
Yet in the early afternoon things suddenly turned around. Off the races! Was it short covering? A rebound after running stops?
Look at this screen capture from MarketWatch.com from this morning's newsletter. You'll prbably have to click it to read the little headlines.
I did not circle everything as I did in the newsletter but if you have a moment and some strong reading glasses peruse the entire page. Every single bit of news was bad except for the headline. Everything. OMG, the end of civilization as we know it.
And then the Dow rallies 900 points.
When everybody is on one side of the boat, go to the other side. It is a lot drier and you can see better, too.