DIABLOMARKET COMMENTARY for Thanksgiving 11-23-00
(There will be no commentary Friday, November 24. We will resume on
Friday December 1)
An all around poor showing so far this shortened Holiday week. The
relative strength/relative weakness of the markets continues with the
NASDAQ making even lower lows. Our “successful test” call of last week
was just flat wrong. The DJI and The S&P 500 remain above their
respective October lows, the S&P closing Wednesday at about 1322 vs. the
October low of about 1300 and the DJI closing Wednesday at about 10399 Vs
the October low of about 9975.
What worries us at this juncture is the resumption of virtually unabated
bullishness as indicated by the Investor’s Intelligence figures: as the
market retraces, or in the case of the NASDAQ, collapses, an astonishing
55% of the polled advisors were bullish this week. This is not a science,
but historical odds do not favor a large leg up in the markets with
bullishness at these levels. In addition, Put/call ratios were roughly
neutral this week, not bearish, but certainly not the 200% to 300%
puts-to-calls we like to see to historically indicate a bottom.
Until we see some real capitulation, we believe that any ensuing rallies
will be short term in nature, “trading rallies” if you will, and should be
treated accordingly. Lets look at the damage…
TECHNICAL COMMENT
The NYSE posted 1894 decliners this week through Wednesday, while the
NASDAQ posted a whopping 4868 declines. The NASDAQ seems to be locked in
a ferocious bear market with 52 week lows outnumbering highs 643 to 27
Friday….Impossibly bearish for the NASDAQ and about as bad as it gets for
this indicator. In this type of bear market, we believe it is almost
useless picking support levels for the NASDAQ, as they simply are
penetrated as if they are not on the chart. We would like to see some
give and take on the S&P and the DJI in order to pick new levels on those
indices. We would also like to see a resolution, one way or the other, in
the Presidential election. We believe a decision may very well calm the
markets, even if it does not lead to a strong rally. |
