[madtrader]
Mon Jul 22, 5:22pm PDT T2108
I mentioned this indicator (percentage of stocks trading above 40 DMA)last week as a possible clue to market bottoms. Anyhow, it finally got down to single digits reading today, around 9.79%. The most recent comparison was back on 9/21/01, which was near 6%. We are certainly within days of that measure if we keep sliding this way. Maybe the bottom is sometime this week. none.
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[madtrader]
Mon Jul 22, 5:11pm PDT $DJI
$COMPX
The volume on NYSE exceeded the volume of Nasdaq today (if you don't count the funny WCOME volume, which was about 600 million). I am going to start using the term cyclical bear here, while we are in a secular bear longer term. Most major cyclical bear bottoms are marked by NYSE volume exceeding NASDAQ's. Over the past 4 days, we have a fairly well defined down channel going on. Needless to say, this down channel won't be going on forever. Which would imply some kind of upside break is coming. I have no idea if these breaks leads to anything more enduring. But a tradable break at that. For the trigger to take place, the upper channels will need to be broken. For DJI it is roughly 8,000, for COMPX, it is around 1305. If you don't want to catch that falling knife, wait for the upside break to take place before you jump in. none.
[madtrader]
Mon Jul 22, 4:53pm PDT Real Estate
One of the worst performing group in the past several weeks are real estate related names. Stocks in housing, mortgage finance are getting crushed. I understand that Greenspan has been suggesting that housing and real estate is healthy, and fundamentals are "sound". I am highly skeptical as to his motives. One of the biggest reason for this bubble that the market experienced, despite his famous "irrational exuberance" comment in 1996, is his easy money policy. It isn't so much what he said that matters, it is what he did. While the politicians and the press are busy hunting for scapegoats, how many dare to suggest Greenspan shares the blame? I have said many times before that I don't believe the Fed leads the market, rather, they are followers. Greenspan's recent comments shows the man is doing just that again, jumping in the chorus of witch hunting politicians. In the twilight of his career, Greenspan needs to keep his legacy in tact. What ever action he might undertake at this point just might be too late. The same kind of "animal spirit" that existed in the NASDAQ bubble is quite plain to see in the real estate market. If one wants a reference of how animal spirits behaves after a market bubble being burst. Look no further than Japan. The Japanese real estate market continued to rise for 2 more years after the Nikki 225 lost 50% of it's value. The similarities between the Japanese situation and what we have here is just too similar to be ignored. The mob just want to delay the day of reckoning by moving into a different asset class. I afraid that Greenspan, being an economist is ignoring or simply don't understand the nature of animal spirits. none |
