are we really going short?

the markets have been on a rampage since a number of weeks back. it has been up, up and up. but is there any reason behind this? i have no clue. but lets just look at some of the factors and you make your own call, and tell me have you ever seen a bear charging up.

economic conditions in general hasn't been all good. positive news have been sporadic, adding fuel to the rally. the current climate still looks very dark and gloomy, and there isn't really a light at the end of the tunnel. not anytime soon. but why this strong upwards move?

my best guess to this question would simply be human rational/irrational behaviour. once the low was touched again, it formed a double bottom pattern, and bargain hunter scooped huge baskets of stocks and keep them in their portfolio. herd mentality led others to do the same as his neighbour or the shoe shine boy. the huge wave in buying led to an increase in momentum in buying pressure, a wave that swept short sellers by surprise, forcing them to cover their positions at either a loss or a reduced profit, spurring the rally. like pouring fuel to a fire.

as a result, the market gives a false sense of impression that businesses are picking up, the market has waded the storm floods and the sun is back up again. people are in a positive mood.

then as we look at the next critical resistance, the highest high since the lowest low was touched, this is where short sellers are lying wait. the wait for the next sign that the momentum has died, and the frenzy of buying will lead to the next wave of manic selling.

today the market turned, whether that is an indication or not, i can't say for sure. it might just be a consolidation. but all i can say is that if you expect the stock market to pick up, stop and rethink.

the next wave will come, and its going to be down.