Question for all:
I have my suspicions about this rally, that it's an early end of year party that's going to leave a lot of hangovers for everyone, as early as the end of high school football season and before we carve the bird.
I can't quite put my finger on it. I know the explanations for the rally but a real, sustainable rally starts from a different point than this one. One explanation is that the suddenly crappy view for bond fund holders (the wholesale dumping of bonds which is depressing their NAV and raising the yields on individual bonds) has money doing a flight to, if not quality, then a flight to, well, anything. Another is "July low and October low volume test"--except that doesn't make a lot of sense, since the October "test" actually broke through all the July lows and all the indicators were less, not more, bearish than in July. That is, the equities market seemed to have further to fall--did the bonds just step in to rescue it? And how long can that last?
I think the best explanation for this bear market rally is really 1) the market professionals needed it, needed a big rally to sell into and 2) after so many shocks and selloffs, the bagholders and lab rats are providing an appropriate wall of worry, continuation of short positions, for the rally to climb.
Many of the older market professional sources (Richard Russell, Lowry's) don't believe this rally to be anything other than a short term, potentially hazardous play for both the long and the short side. Selling pressure is still at historical high areas and buying power is still weak, to use Lowry speak.
Anyhow, my question for the regulars here is: what, if any, of your particular favorite indicators is telling you that this rally is real or running out of gas?
Vix back up firmly in the 40s base camp area. I'm looking back over comparisons between the VIX and the DJIA, and it's a puzzlement. Any views:
stockcharts.com[w,a]dbllyiay[pf][vc60][iut]&pref=G
Here's the CPC:VIX someone provided a while back:
stockcharts.com[e,a]dhllnyay[dd][pb21!b200][vc60]&pref=G
What's this one likely to mean here?
In particular, since the TRIN measures the power of rallies (advancing volume vs declining volume), what does the daily or weekly TRIN tell us?
TIA,
Kb |
