In reviewing the long-term charts tonight, I get the distinct impression of a market on the brink. I do NOT know if it will be pushed over the brink, but what I do know is this: if price pushes much lower, it should bring on a ton of new supply (ah, the bizarre shape of the stock supply/demand curve - where else does *falling* price increase supply?)
I also get the impression that many of the former "safe havens" are being raided as we speak. Retail is clearly rolling over to me, and homebuilding appears to be launching the recognition wave down. Financials, especially those exposed to the stock market, look like crap. Volumes are rising now as many of these stocks approach or breach key levels.
Stocks that appear to be asserting downside leadership:
Look at PG - if they don't fix that one quckly, it is going to add serious pressure to the Dow.
In the homebuilders, most have completed low-volume upward corrections following initial impulses downward, and should now be in recognition: PHM MDC RYL TOL
Some consumer finance in similar boat, others finally completing rounding tops: BBBY HDI HI PVN
Financials are getting heavy selling pressure: IFIN MBI SCH
INFY has breached key rising support (finally!)
And I don't think any serious retest of the October low would be complete without weakness appearing in the following issues:
KLAC LLTC MXIM LRCX MERQ NVLS HLIT IBM
I remember a quote from 2000 in which someone said that the whole global economy depended upon the US stock market, which depended upon 100 technology companies, most of which had never posted the first dollar of profit. Well, now the whole of the global economy depends upon three companies: MBI, FNM, and JPM. Watch these closely. They represent the trio of pillars supporting the unsustainable global economy: structured finance bubble, mortgage bubble, and derivatives bubble.
I am particularly intrigued by the activity in MBI. It is building a mythical triple bottom. If it fails (and in all likelihood it will - triple bottoms are very rare), I will immediately release a portion of my hedges at the market. They *are* the structured finance bubble.
BC |
