| Ever since The New York Stock Exchange building opened on April 22, 1903, it has flawlessly followed a particular pattern that, even to this day, still stands: hope, greed, skepticism, followed by, fear, panic, despondency whereby the pattern is once again repeated by beginning with hope. It is a cycle that can either make or break traders, whether expert or beginners, as the ability to distinguish between the greed and skepticism aspects is usually overshadowed by money. As the infamous 1987 Wall Sreet movie character, Gordon Gekko once said, “It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.” Taking this into account, its now important to identify how the markets have begun to step into the skepticism state of mind, with fear beginning to queitly tip toe through the herd of retail investors. One of the leading mistakes traders often overlook is getting caught up in the mainstream media hype instead of following the principles that got them to where they are at today. It seems every major station you turn to these days, of the likes including CNBC, Fox Business, Reuters, Bloomberg, et al, have been bumping up their forecasts for the major US exchanges. When you have the likes of Barry Knapp, head of equity strategy at Barclays Capital, stating that the S&P 500 will rise 12% by year end 2011, especially after the ridiculously bullish run we’ve had, a few red flags should have already risen right there and then. Despite this feverish level of bullishness currently plaguing investors like an incurable disease, it seems that finally the social undertow of fear, skepticism and anger is coming to a boil, as Google queries of the “ Buy A Gun” search query have just hit an all time high. How much of this is due to the recent events from Bernanke’s money printing scheme and food inflation is unclear. What is clear is that the trend is most certainly not your friend. It is also ironic to note that the last time the queries for this term hit near similar levels, they seemed to have preceded prior market tops followed by large corrections. How’s that for a nice stock market conspiracy theory?
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