Indexit: I really enjoy reading your thoughts on the market each day. You seem to be one the few on this board who feel somewhat positive about the market, but can't find much in TA to support your feelings. Perhaps it's your experience/intuition telling you this. I also feel and have felt somewhat more positive than TA would indicate. I definitely don't feel we are in a new bull market. In fact, I feel there is more bear to come. But with government policy being what it is, it's quite possible a stronger upside move than now expected could occur first.
Although there seem to be few clues as to direction and although the trend does seem to be down, I feel there are some clues that could indicate a surprise the other way. The news a really fairly horrendus. And yet:
Money flow (NAZ) is positive as accumulation appears to be occurring rather than distribution.
While trend indicators appear to be somewhat negative, on-balance volume continues to rise. Bollinger bands appear to be pinching out more and more - possibly predicting what? A faster downside move? Or the reverse?
In breadth indicators, despite the spate of bad news the NYSE advance/decline line is actually rising. However, the NAZ is in a declining mode. And VIX? Is it really that negative? When the market rises VIX drops. When the market drops VIX rises (lately at least). Looking back, it seems that VIX has spent a lot of time in the mid to low 20's without the market dropping much. As I look closer it would seem that the real trouble begins below 20. Net hi-lo's? The NYSE appears somewhat positive while the NAZ appears somewhat similar to 1999.
Market strength? RSI is close to neutral. Could cross over up.
Aroon, while negative, could easily go either way.
Sentiment? The latest reading of the American Association of Individual Investors has 30% bullish, 38% bearish.
The market shows few signs of being oversold. This would be a negative, of course. But with all the bad news coming out and the market remains clueless? I would think things would be way oversold at this time. But they are not. Could it be that this market is a lot stronger than it appears? Probably just wishful thinking. But one never knows. One anecdotal note - I have not been trading lately (longer-term buying). But my retirement portfolio, which consists of quite a few tech stocks has about the same value as it did 2-3 months ago. Makes me wonder.
In the final analysis I would guess this market will probably continue on down, based on current TA. However, I still will not be surprised if it pulls a shorter term surprise in here. I think the Bollinger Bands indicate some larger move coming in here - and faster than the decline of the past several weeks.
These are just some thoughts in response to your post. Keep up the good work. Keeps me thinking.
Ken |
