Whose Market Is It Anyway?

 | Feb 06, 2013 | 1:46 PM EST
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After bouncing back to positive territory, the indices are under pressure again following very bearish comments by Byron Wien, former chief investment strategist at Morgan Stanley, who echoed many of the bearish arguments we have heard from Doug Kass recently, which have been ignored so far but are quite logical and compelling.

I don't dispute what the bears have to say, but my approach is not to worry too much about it until price action indicates that the market is embracing the negatives. The tautology that something doesn't matter until it does holds great wisdom for those of us trying to find a way to navigate the market.

For as long as I've been trading, the market has never lacked brilliant, insightful and logical arguments by bulls and bears alike. It is always possible to construct good arguments for either side of the market but, in the end, all that matters is what investors think. If they are happy to ignore the negatives, then we are going to see the market go up regardless.

Watch for signs that the masses are changing their thinking. When we see weak closes, intraday reversals and technical distribution days, we need to start worrying about the bearish arguments. The bears are convinced that the bulls are ignoring major warning signs. That may be true and as soon as the price action weakens, I'll embrace that view.

The market is rolling over harder as I write, and if it retests the early lows it will be a major negative.

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