Nice call. It's always good to see someone making a lot of money honestly, even if a little bit of that is at my expense. However, 2330 on the Nasdaq Comp has to be broken decisively for me to establish a constructive long position. Monday's market concerns (Higher rates, inverted yield curve, Iran, housing bubble, consumer debt, inflation, etc) did not get erased as a result of Tuesday's relief rally which cleared somewhat the short term oversold condition. Higher rates are not bullish for small caps moving forward. This is why the Street is beginning to plough into large caps. I don't take that as bullish. I wouldn't dare short the S@P 500 here, at least not yet. I'm short the Russell 2000 (as a hedge against longs) and S@P Midcap 400 (net short). Breadth was disappointing yesterday, especially on the Nasdaq, given the extent of the rally in the major indices.
The Nasdaq (along with the RUT & MID) needs to confirm yesterday's move higher by the Dow. UIPIX (short S@P 400 midcap fund), was up 24 cents on Monday and down 24 cents yesterday. Where is the rally in the midcaps? UCPIX (short Russell 2000 fund) was up 39 cents on Monday, down 44 cents on Tuesday. Where is the big rally in the small caps?
Maybe you'll be proven right J.T., but I see the Market setting itself up here for a nasty decline by the end of March. Watch the possible negative divergencies come to the fore here.
I'm no permabear nor permabull. I just call it the way I see it and I position myself accordingly. This is options expirations week so I think we'll get a little better read next week.
No doubt, the Bears had a great opportunity yesterday to put the Bulls on the defensive; but couldn't deliver. So, what do we have here in terms of sentiment now? Euphoria and more Rocket ships to the moon describing future market action.
Sorry to rain on your parade, but I see the current rally as petering out and these markets moving lower.
Enjoy Disney World.
My Answer: F) No follow through to confirm yesterday's rally. |
