J.T.,
While I understand that you are rather bearish at present (and not all together for bad reasons), let me point out that while you are correct in citing the $TRAN and $UTIL are below their 200 day MA, the big five indices are not. $DJIA is well above, as is the $COMPX, the $SPX, the $NDX, and even the anemic $RUT is well above their 200 dma!
While their are many reasons to have concern regarding the market-- breadth (highs-lows, a/d, p/e, etc.) their are some legitimate reasons that the transports are below their 200 dma. Both the utilities and especially the transports are effected by the recent spike in oil prices. And while the transports (which dropped below 200dma about the time oil spiked upward) have not confirmed a DOW theory sell signal yet (and many analysts who are much sharper than either of us raise some questions about the transports having the same place in DOW theory as they did when the DJIA measured production and TRANS measured the moving of the goods to consumers (i.e., production and consumption as in the CPI and PPI). As for the utilities, they are just now at their lower Bollinger band and it will take a couple of days to see if their support holds.
While I have some legitimate concerns regarding the overall health of this bull market, I am reluctant to buy the bear case either. The DOW bounced off of its 200 dma twice now in two days, and rallied well both times. Investor sentiment is more bearish than it has been since 1996 which is a very good contraindicator. All major indices are well below overbought area in terms of RSI and Stochastics. I doubt that any of this will change your opinion, however, if you watched the tape over the last couple of days you probably noticed the steady accumulation of large blocks of stocks on every sign of weakness. This would indicate at least a near term uptrend in my opinion.
Matt
PS: See you at the expo?? |
