. . . . . . . . . Bull In A Bear-Suit? . . . . . .
Nobody hates being Mr. Doom & Gloom more than I. But I must state that I believe a near-term high is about to be put in here. . . . within 5 trading days. I don't see sufficient volume or momentum to support the current rally beyond that. I believe that the FED may choose not to act at all at this next meeting, based on economic strength & expansion, low unemployment and inflation threats.
If that isn't enough, take a look at the VIX. It is at a very unusual low of 21.22. The last time it was this low was late last summer. . . between mid-August and mid-September of 2000. And before that, the last time was March 3rd of 2000. . . anyone remember what happened after that week?
I wish I could take part in the bullishness that seems to be running rampant suddenly . . . .but I must call them as I see them. And it is very interesting that so many bears have recently become bullish. Look around the net at the popular bears calling longs. It is hilarious, because that has always been a glaring indicator. . . .so perfectly contrarian.
Even long-term bear, James Cramer [on CNBC today], says we are in the midst of the next great bull market, and says you've gotta be in it. . . . I don't think I have EVER heard such bullishness from him. And if there is anyone that I want to be playing on the opposite side of, it is him. For the year of 1999, when small time traders here were up 300+ percent, he was down about 2%. . . .and that is quite difficult to imagine.
So where do we go from here? I still believe we will re-test the April 4 lows. Were we to break 2650 on the Nasdaq, I might be convinced. But the way things are shaping up, I doubt we'll break 2350 in the next few weeks. I am also expecting more earnings warnings to take the bite out of this market throughout June.
The first week or so in July has been historically quite strong in recent years. . . however, the final weeks tend to turn south quickly and sharply. . . as the summer doldrums set in. Could we get a summer rally that keeps on going right through into September? I just don't see it. 96 and 97 both saw upward moving summers, but they didn't have the sort of volatility that we have in the current market.
That Summer Bear Trading Range effect we have noted in past years, whereas the big boys take off for the summer. . . taking their volume with them. . . is the dominant factor affecting this market, IMO. There just isn't enough volume to sustain a rally, IMO. And that is why we maintain a trading range when they are gone.
ON THE OTHER HAND. . . .
We've seen the resilience of this market despite the way it looks. I have been impressed at the gains the past few days. You can't turn your back on a dull market.
At the same time, I must stick to my guns and call what I believe I see. . . right or wrong. . .popular or contrarian.
Finally, like we tend to do each summer. . . . . 3-letter Dow stocks, cyclicals and REITs may be the safe harbor for the summer. . . .as we wait this thing out.
Best wishes,
Rande Is |
