Several times this week the (US) market has started out negative...

Several times this week the (US) market has started out negative and recovered towards the end of the day's trading. Last night's example was the most obvious. Everyone says the market needs to pull back a bit, yet everyone is just as equally giving up resistance and going with the flow. Who is going to be the first to blink, and who is going to be the last man standing when the pullback (whether minor or major) happens?

I hear lots of talk about the mainstream investor feeling secure enough to put their money back into the market, I've had my wife come home telling me to buy some defensives like CSL because they are a bargain right now and a great long term investment (which I think it is by the way), I had a friend yesterday telling me he's getting on board CBA "at any price" because of its profit projections so its a once in a lifetime opportunity. these are all the anecdotal hallmarks of euphoric bubble behaviour that must pop or let out some air because its unjustified on the current fundamentals including topline growth forecasts.

I'm not a bear, but I'm also not a bull right now, which makes me either a fence-sitter or a realist without rose-coloured glasses on, I dont know.

What I do know is that recent and current prices are still below the long term pre debt fuelled (2003-2007) market growth trends, so for a long term invsetor the market is cheap, but equally, I feel like I'm out shopping and I know the sales are going to start next week so why would I buy right now. If I've got a short term horizon as a trader then one thing I do believe is its getting riskier by the day to go long, but equally its tough to go short because I dont know how much higher prices will spike before reality lets some air out of the tyres. This scenario has provided some great opportunities, but it is getting harder and harder to identify opportunities with reasonable risk/return ratios imo - setting stops at the right levels is getting more challenging.

Anyway, my view is the market has seen the bulk of the improvement its going to see this year so with 2010+ in mind going long is still very attractive and therefore I'm bullish on that timeframe, but for the remainder of 2009 there is significant uncertainty subject to sentiment swings and ups and downs in fundamental data over the remainder of the year.

Interesting times...sorry if this has just turned out to be a bit of a rant!

Cheers, Sharks.