Take a look at the Dow and its 200 SMA in the daily and weekly charts. Also, in the weekly chart, there's an interesting thing going on with the candlestick today and the real body of last week's candlestick. It'll be interesting to see whether the Dow plunges into the shadow of last week's weekly candle, and whether the Dow can hold above the 200 in the daily and weekly charts.
Complacency now and Friday:
ST Naz CI: 68.970, 66.457
MT Naz CI: 70.941, 68.588
LT Naz CI: 94.696, 94.267
ST S&P CI: 73.156, 94.156
MT S&P CI: 84.833, 95.477
LT S&P CI: 97.432, 99.238
The complacency indexes for the S&P are indicating a reversal in the uptrend. But they could reverse again at any point. The significant thing, to my mind, is that LT Naz and S&P complacency is at an overbought extreme. One could gather that from all the bullishness on CNBS last week, anyway. It's difficult to think clearly when sentiment becomes so resoundingly one-sided. Every story, no matter how bad, gets a bullish spin.
The story on AOL is fascinating, because it could be the biggest loss in corporate history, and it will "sharply reduce" AOL's assets, as the NYT reported today. The Times said, "The charge reflects the overvaluation of Internet stocks at the turn of the millennium." Have we seen all the fallout from that bubble yet? And yet with a P/E of about 75, AOL hasn't taken much of a hit after the news. (I haven't shorted the stock, btw. I'm just interested in it since Chris posted the GS take on it, with the "granularity" comment Friday, and then the actual news was released yesterday. I think this market is in denial.) |
