Market correction

The market rises even though there are bad news everywhere. There are people justifiying this rally because the market is forward looking - that the bad news will be over. Will it?

This is just the start. It is true that subprime woes are gone. BUT, there are other factors not considered yet. Corporate earnings have not adjusted to the impact from the subprime crisis. There will be future erosions of profit margins.

First, the foxes enter the market, taking a risk with huge reward that the market has bottomed for the time being and a rally will be in force. Next, at the later stage, the pigs arrive, thinking that it is a sure win bet but never do they know that it was a late stage in the rally. They became pork chop for the foxes. Yum.

Gold price is rising again. Some people forsee another correction.

This is the late stage of the bull market that started in 2002. Sell into strength, efficient market theory does not apply.