We have a healthy dose of fear shown by:
1) High $VXN
2) Today's high equity P/C ratio
Also, no sign of overbought:
1) Low daily stochastics
2) Low $BPNDX
3) Low(ish) number of stocks above 10 DMA
What is concerning is that from the early Aug bottom in the NDX, the indicators above were in a similar bull friendly status, but after only a very small rally they were indicating a top again. This makes Al think the rally will be small, but we will worry about that when the indicators say, rather than try to predict the strength of the rally in advance.
From a personal (non-Al) point of view, the economy is precarious. Mortgage defaults, consumer debt, overcapacity, increasing inventories, high public debt, threat of war etc. But all these things are known to the market and should be factored in with the indicators, so Al is not bothered by such frivolities <g> and quite able to go long. |
