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Pastimes : The Philosophical Porch
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From: Rarebird4/29/2008 9:13:30 AM
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Transcendental Market Fragments:

The Market:

The fact that the market is stalling at the top of the trading range should be a strong warning that the market has run out of gas, but it's not a sell signal in and of itself. It's possible that the smart money has finished distributing stocks to the weak hands, but they may need to run the shares up the flagpole one more time to unload the rest of their inventory and get short. That's one thing to look for in the next few days, probably right after the FOMC meeting ends on Wednesday afternoon.

Banking Sector:

The banking sector index, BKX, has been gyrating up and down in what appears to be a contracting triangle, which is a continuation pattern in the middle of a trend. The trend going in was strongly down and, if that is the correct pattern call, implies the current rally will morph into a strong decline to a new low in the days ahead. Negative Accumulation-Distribution here implies insiders selling into the rally, unloading bank shares to bargain hunters.

Bottom Line:

The current rally in the stock market is likely by the weak hands, who will be quick to take profits on weakness. This could turn into a waterfall decline since that crowd tends to act more herd-like than the longer term buyers. This bounce has not seen the kind of accumulation I would expect to see had the long term buyers been active.
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