Hi, Was looking at some charts and just seeing very bearish behavior in many things other than the indices and major stocks that most people look at. It seemed to start in December and it seems to be getting worse: Stocks that miss are gapping down and continously selling off with no bounces Fewer and fewer stocks are gapping up versus gapping down (the ratio I keep has skewed very negative) Gap downs seem to be more pronounced Semiconductors still haven't rallied. Overbought oversold indicator I use for my trading (i filter for specific stocks that meet my criteria) normally overbought after the indexes rallied after 3 days, r ight now its oversold so there is a divergence with indices. Basically, the behavior I started seeing in December seems to be getting more divergent and I have never seen this before. I didn't have these tools in the last bear market so I'm wondering if this is what it looks like. I'm primarily looking at domestic stocks. I am not looking at specific sectors (like emerging markets/foreign markets or commodities). I'm looking at the 'overall' market. perhaps breakouts are failing, what are breakout players seeing? A few other things. What say you?
Correction maybe, but bear market not likely. Lots of people still skeptical of this bull run, so I think we are headed much higher. The other thing to note is that before a significant change in trend there is an increase in volatility which we have not seen yet.
It is certainly not a bullish sign that even good days lack any serious volume. It doesn't necessarily mean we're entering a bear market, but it makes the case for a continuing bull market less than compelling.
Some interesting action this week. Of course a lot of noise with snowstorm and preholiday. But at recent index highs there was not alot of squeezing action. Kind of lazy follow through. As always, don't predict, react...
I can't argue that the trend is up, but the volume in the U.S. market is lacking. But then I read Bloomberg tonight, and come across this : Asian Shares Advance, Set for a Record, Led by Japanese Retailers, Daimaru http://www.bloomberg.com/apps/news?pid=20601087&sid=a_hNyhE0ISpY&refer=home Everything is so intertwined on a global basis, maybe I'm being short sighted.
I know how you feel ByLow. I am about ready to throw in the towel on my QQQQ short. Looking at the global situation and the Fed bent if I didn't have a position on I would be looking for a short term move higher in tech. I'll wait and see what HPQ has to say and what the reaction is. What I am fairly sure of is that a significant move is coming (usually what this contraction of volatility signals), just not sure which way it is going to go but based on recent history in the rest of the market it looks to be up. I think we are in a period where liquidity is butting heads with reason and unless something happens to curb liquidity it wins over reason every time. Also looking to see if the Yen continues to strengthen and if the BOJ stays pat despite recent strong data out of Japan. Maybe like the subprime blowup a yen carry trade blow out will not matter either. Hard to say what the catalyst will be. I thought I saw signs of the correction starting which is why I jumped in on the short side but now it looks like I read things wrong. Read a piece about how there is a huge amount of puts that are putting a bid under the market, can be a double edged sword if we head down for some reason but absent that it works in the bulls favor http://www.minyanville.com/articles/index.php?a=12171 Incidentally, I know you read Hussman's commentary as you have posted some of his articles on ET, just keep in mind that while he makes perfectly convinving and logical arguments the guy had all his long positions fully hedged at the beginning of the run last summer and has not profited from it. He himself admits that he is not a market timer and doesn't seek to time the market. Also, according to Hulbert most of the top market timers are all still bullish.
I will put my neck out there and say a top is in on ER at 821 and change and we correct to 765 over the next 10 weeks. ...No, I am not smoking anything. If 765 does not hold then we go to 728 over an additional 8-9 weeks. And this will be a pullback in an uptrend that started on 03/14/2003.