The contrarian chatter continues

Yesterday, it was Dr. Marc Faber who noted that equity markets may rally "soon". Today, Bloomberg reports that Robert Prechter of Elliot Wave International thinks that it would be a good idea to exit existing short positions and prepare for a rally.

Prechter, chief executive of the market forecasting firm, warned in this month’s ‘Elliott Wave Theorist’ that a rebound in stocks could be “sharp and scary” for anyone who is so-called short.
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“This is an environment of escalating financial chaos,” wrote Prechter, who first shot to fame in the 1980s after cautioning investors that stocks would crash two weeks before Black Monday. “Our main job is to keep the money we have. If we exit now, we will do that.”
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“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”

Better early than late is almost always an excellent idea and too few who take this route look past the difficulty in exiting positions they would have encountered, instead focusing on the gains they missed after not sticking around for the tippy-top.

As for Mr. Prechter's other advice, it's hard to take anything he says too seriously after proclaiming rather loudly about six or eight years ago that gold would never top $400 an ounce due to the coming "deflation".