Google seach preceding 3-8-12In the perpetual cycle of the masses buying toward market tops and capitulating toward market bottoms, I often think of the old Wall Street adage; “It’s always darkest before the dawn” which refers to the fact that market bottoms come when the news regarding the fundamentals and the outlook for the markets and economy is horrible yet the deterioration looks almost certain to continue going forward.  I’m sure there is a good corollary to that statement out there somewhere which essentially says that things are looking great at a market top and just about all forecasts and trends point to things only getting better from there… or something along those lines.  With that, I leave you with these two Google searches using the same keywords, the first one limited to headlines over the last month and the next one limited to headlines over the month preceding the market top on May 2, 2011, just before the 5 month & nearly 22% plunge in the index.

 

Google search preceding 5-2-11 market topKeep in mind, being contrarian just for the sake of being contrarian will usually cost you money, either in the form of missed out gains from sitting on the sidelines and missing out on a rally (or shorting a correction) or even worse, from fighting a trend that there is little technical or other substantial supporting evidence to support your case.  In other words, you can’t just go shorting the market every time things look good or buy the market when the fundamentals look ugly.  However, when it comes to choosing between fundamentals (which I view as dated information, almost always fully priced into the market or a stock by the time you or I hear or read about it) vs. technicals (charts), I will side with the charts nearly every time.