Alt8, the groundhog saw his shadow.
There has been absolutely no capitulation by small investors. . . there has been absolutely no change in the volatility index. . .jobs are in extremely serious jeopardy in the U.S., in my opinion, with no clear solutions. . .and politics are as usual in an election year.
Meanwhile, the Dow has appeared to have led the COMPX by the nose the past month: with every trick in the book. . painting the SPOOS, faking lower with last minute rallies into the green, etc., etc. . .it has been like watching kids competing in the school yard. Sound familiar? "Dow closed up 10 points, while the Nasdaq closed down 4."
This is the behavior of a bear, not a bull.
That said, the reason the correction took as long as it did in my opinion, is that the small investor was hanging on like a junk yard dog. . . and still is. Today's positive spin on the jobs number caused a knee jerk reaction, in my opinion. I don't see any real change in any of the major indicators used for verifying market turns. So I can find no verification that we are finished correcting.
As for your question about whether we will reach a 10% correction in the COMPX "sometime next week". Things seem to be moving in an odd "slow motion" of late. . . so it could take a few weeks to get there, erasing all COMPX gains of 2004.
But have you looked at long term charts of the Dow lately (excluding today)? Let me tell you. . . if this were an electrocardiogram, we'd be calling a code blue. I searched and searched for a Dow chart that has had a flatter line than we have seen in the past week (or the past month for that matter). I quit looking in the 40's.
So there are two forces at work:
1. The irrationally exhuberant individual investors, who are "bullish America". . are shrugging off job futures, economic predictions, impending inflation, political uncertainty, geopolitical turmoil, terrorism fears, biological fears, halftime celebration fears or even the fear of hearing the new pop culture words, "you're fired" (said while moving hand in striking motion like a cobra).
2. The investment banker / institutional investor / hedge fund manager / fat cats who refuse to buy high no matter what. These are the guys who build hundred million dollar office buildings, then set the rent so high that nobody rents. . . and what do they do? Lower the rent? NEVER. They let the building sit absolutely empty for 5 years, 10 years, 15 years . . . whatever it takes until they get their asking price. So these guys have seasoned patience.
Who will win this tug of war? Honestly, I don't think anyone knows the answer to this question for certain. . . though every other guest on CNBC claims to have the answer. What else is new?
I believe we continue "trying" to correct, until techs are considered bargains again and some volatility is restored to the markets.
The 70's come to mind when watching this market. Let's hope we don't ever again slow down that far. The small investment community have lined up at the gates. . . ready to invest. . . but the park is still closed.
Thanks for the question. Hope you are well.
Rande Is |
