Jay, first my "targt low" for the Naz was 1900 (I stated a number of times that I see a lengthy period of the naz being in a broad trading range of 1900 to 5300, lengthy, I mean now some 4 to 6 years), not 1800, if 1900 is breached on a closing basis, I don't know where we stop, the charts have 1400 as a very strong support, but I don't think we will get that low. Second, I am always equivocal, the market knows best, right now, I believe, we are in a bear market rally. The problem of course is that any "bear market rally can turn into being the beginning of the "real" next bull move. Most of the time, we really do not know. Here are some pro and con for the "Real Bull" move vs just a "bear market rally":
Here are some of the "bull" case indicators:
The number of new lows in the January low of 2250 was only 450 or so vs 950 in the December low, a newer low with fewer new lows is bullish.
The tick on the fed rate cut reached an extremely high positive number (more than 1100 on the Naz and 1500 on the NYSE). We have not had such high readings all of last year, an indication of a potential shift in market psychology.
Last week the Naz, went above the high set on the fed reduction rate.
The fed's is on the bull side.
Here are some negative:
To have a real bottom in place, we often need two consecutive days of extreme bullish tick reading, we got only one.
There was no extreme pessimism just before the the fed induced rally, (no extreme negative tic readings as we were making new lows).
There is a divergence between the Dow and the Naz, with the Dow relatively weak and not making a post fed reduction new high.
The Naz, overall is still overvalued, bear market end with washout and preponderance of great values.
The SOX, an important element in any future bull move, is not "ready" IMHO. The equip BTB is still declining, it should bottom, and I believe it should bottom under 1.00 to have a turn. INTC and AMAT, this space leaders are relatively weak (they failed getting above their January 3 spike).
All in all, I am weighing to the side saying that this is just a bear market rally not the real bull move. Thus, caution, IMHO, is still a key element. There is really no reason to rush, if you remember, when you asked me some time ago about SSTI valuation, I also said that a "fair" bull market valuation could be as high as $70 or so, thus there is still a long way o go, if this is indeed a real bull market, and missing (for long termers) the first thrust up should not be a concern. There is a clear and present danger that in February much better prices might be available , IMTO.
I hope that clarifies my being "equivocal", the market is king, and I am just trying to read my turnips, they rarely say "Buy, Buy, Buy", and when they do (like they did few times last year, like in late May), they still reserve the right to be wrong and change their mind, and change their mind often (g).
Zeev
irrevolute.iuma.com |
