. . . On Internets. . .
Low volume market. On the near-term. . . Will it pick up after FMOC? It think it will if we get a 1/4 point hike and no change in bias, which is what I expect will occur. But I don't expect volume to increase dramatically until after Labor Day. I think we will see a spurt after FMOC, but no matter what happens, I don't see the volume lasting more than a day or two.
Because right around the corner looms a giant.
Transportation [a leading indicator of general market direction] is still pretty weak: clearstation.com
The Dow Industrials, in case you haven't noticed, are just what, 60 or 70 points away from their all time high again: clearstation.com
Small caps recovered from the terrible decline, but hardly convincingly. Volume is very weak, and there does not seem to be much confidence in their performance. Breadth has been bad for many weeks.
Internets don't need heavy market volume to make their moves. . .it only helps with our confidence in the moves they make and what it means to high-techs in general.
But there is an old adage. . . .I don't quite remember how it goes. . .something like "never short a dull rally." In other words, a rally on low volume can always go higher.
There was a big spurt in internets and high-techs just about 8 minutes before the close on Friday. Look at the intraday: clearstation.com The whole market perked up with volume. . . was that fund managers? Bigger players jumping in at a bottom? Daytraders loading up for what they believe will be a big gaining week? I don't know. . . perhaps others may have a better bead on that.
Advancers did beat decliners and there were more new highs than lows, for the first time since I don't remember when . . .and it all changed in the last few minutes of the day.
So from a practical view, the internets look fairly good. But then I look at the longer view of charts on internet stocks. . .and consider the possibilities of a China devaluation and how easy that card would be to play against the markets. . . .and I am led to once again wonder if we won't see a sell-off of internets AFTER the FOMC and possible rally. . . which would lead to a retest of lows. . .http://www.clearstation.com/cgi-bin/details?Symbol=_IIX.X&Refer=/cgi-bin/diary%3FSection%3Dredge%26Refer%3D/redge.html
We know that China is seriously considering a devaluation and one calculation has it occurring between about Sept 22 and October 2. . . . So the only thing missing from putting the major markets in fear . . . is the media hype about the ramifications of a China devaluation. We have not seen it covered in the headlines. . . yet.
What does all this mean?
We've seen a good looking bottom on internets and a subsequent rally that has been moderately convincing. We face the prospects of the Fed putting a hike off until October, which would [in my opinion] cause markets to sell-off on renewed worries, having anticipated the hike. . .or a hike and very brief knee-jerk rally [though most gains are already figured in]. . .but most importantly of all, in my opinion, we face the threat of opening up a newspaper and seeing the China story designed to send chills down the toughest traders spine.
Regarding the markets. . . Let's just say conditions are perfect for a tornado to develop quickly and blow things apart, destroying in minutes [literally] what may have taken weeks, months or longer to build.
But in the meantime, we have some beautiful sunny days, in which to spend outside romping and playing.
But I wouldn't stray too far.
Rande Is |
