Bull markets, it is said, climb a wall of worry. Smart investors buy
in early when worries about profits or inflation or wars scare away the
faint of heart. Latecomers then bid up stocks as each worry becomes
unfounded, until there is nothing left to worry about. Once there is
only good news, the market peaks as there is no one left to buy.
Bear
markets, on the other hand, fall into what I like to call the pit of
doom. Forget about worries—actual bad stuff happens, until nothing bad
is left to happen and the market bottoms as there is no one left to
sell.
From early May through last week, the market dropped 1500 points into the pit, on the backs of gushing BP oil, riots in Europe, a 30% drop in pending home sales and the news that maybe your next door neighbor is a Russian spy. But now we've seen 680 Dow points added over seven straight up days before a slight decline yesterday. What the heck is going on?
