Despite being down 3 days in a row, the bulls remain stubborn and view this pullback as being temporary. Yesterday's equity put call ratios were still relatively low despite the weakness. Almost all believe in a year end rally based on a chase for performance. Even Jeremy Grantham who is bearish now is allowing for the possibility that we'll rally to year end in his newsletter. But let's look at it from the viewpoint of the buyer. If the majority are looking for a year end rally, won't the majority just buy ahead of it?This stubborn belief may just delay the true killer selloff into the middle of November after nonfarm payrolls report is out and everyone thinks the waters are safe.
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