Gottfried,
MRVL comes through again - beating expectations. Now if we can just kick the SOX into gear we can have some fun.
PVZ, I see that the opinion of many of the SI pundits is such that an extreme correction is now in order. In your case, this bear rally is nearly over. In Dr Hed's scenario, a 100 pt NAZ plunge is in the offing before resuming upward (before the really big kahuna).
I see that the McLellan oscllators are saying oversold. The NYSE is way, way up there. The NAZ still not sending any alarms, but oversold still. I am studying past market armageddon aftermaths to see ho they progressed.
I wish I could overlay the $COMPQ chart with the NAZ McLellan, but I cant:
Here is COMPQ for late 2001 scenario:
stockcharts.com[d,a]daclyyay[d20010601,20020131][pb50!b20!b10][vc60][iUb14!La12,26,9]&pref=G
Here is corresponding late 2001 McLellan for the NAZ:
stockcharts.com[d,a]daclyyay[d20010601,20020131][p][vc60]&pref=G
Note that after the armageddon, the McLellan went to way overbought pretty quickly (in early October), then meandered down while the NAZ continued to rally into January. There was no dramatic correction to the overbought oscillator. The McLellan oscillator, representing the difference betwen the 19 and 39 DMA's of the A/D line, drifted down toward 0 as the 39 DMA caught up with the 19DMA.
Looking at the COMPQ charts, the rally advanced in fits and starts, with big advances interspersed with sizeable drops to the 10 DMA.
Next lets look at 1998. Seems like ancient history. But look at the charts:
COMPQ first:
stockcharts.com[d,a]daclyyay[d19980601,19990131][pb50!b10!b20][vc60]&pref=G
The move is practically straight up, but instead of the big fits and starts, the NAZ methodically marches forward a little bit every day. Even the down days are muted. Here is the McLellan. Not what you would expect at all. All during the month of November, the oscillator is plunging hard, after rising all during the month of October. Without looking at the COMPQ chart, you would be inclined to think that bearish things were afoot in Nov 1998.
stockcharts.com[d,a]daclyyay[d19980601,19990131][p][vc60]&pref=G
If the NASDAQ had an A/D line of +1000 for 39 straight days, the it follows that the 19 and 39 DMA's would both be identical and the oscillator would be zero.
The conclusion being that after an armageddon selloff, you really cannot put any stock into "overbought" signals from these oscillators.
Now if you look at the current rally, the advance (lately) resembles the "methodical" 1998 vs. the jittery 2001 rallies:
stockcharts.com[d,a]daclyyay[d20020601,20021231][pb50!b20!b10][vc60][iUb14!La12,26,9]&pref=G
Now I will throw in a chart showing the 2 bear rallies of early 2001:
stockcharts.com[d,a]daclyyay[d20001101,20010631][pb50!b20!b10][vc60][iUb14!La12,26,9]&pref=G
Both show sharp, jittery patterns upward on heavy volume - typical of bear market rallies. The current rally as it is developing has signs of an early bull. Low volume, as infidels are still hiding out in MM funds. We need to see this volume gradually increase, and we may need to wait until after Labor Day to get true confirmation as to which way the big boys are going to play it.
Also re: last weeks economic indicators. Remember the stock market predicts 6-9 months into the future. Careful about using rear view mirrors.
Me, I will just play the market as it develops. Only I had better be more careful than last time.
I am concerned about the low equity P/C ratio today. Can I get historical information anywhere on post armageddon rallies to see if this is normal or not?? Will check CBOE website and see what they have.
Warp |
