It seems to me what the markets are doing now is consolidating. They made substantial gains in the Santa Claus rally and they are now taking a pause for breath. "That's a very anthropological view of something as inhuman as a market," I hear you say. Well, ignoring the fact that markets are driven by human decisions, I agree. This is not a pause for breath it's an intense battle. Traders who have been in the market while the move up developed have now taken sides:
- there are the naysayers who think to themselves "enough is enough" and they bank their profits
- then there are the optimists who say "just look at what the market has done, there must be more to come". They take the pull-backs as opportunities to buy up shares dumped by the pessimists. (Don't forget: the trend is my friend)
I have said before and I say again I am a bull, partly because of time of year and partly because the response to the beginning of tapering of QE was so muted.
As ever I am ready to switch direction on a sixpence if my view turns out to be mistaken, but for now I am basking in very satisfactory improvement in my position.
My portfolio has been helped by a strong recovery in the dollar which was going really well until excellent retail sales figures, announced this morning, gave the pound a terrific lift.