Cowboy, Pete and all: BK is a myth? Santa Claus is coming to Wall Street next week? May be or may be not. I know how you, as a bear, feel. If you look at what happened in October, November and in December - every sell-off is met with renewed buying. Obviously bearish convictions are really being challenged. Don't forget, a vast majority of the bulls are getting a dose of tough-love from the market. It is really tough to stay bullish without a clear leadership group or company.
As far as I am concerned, I am seeing a few things that still indicate a hopeless fight by the bulls.
1. Today's breadth is awful. NYSE NLs are twice as many as NH's. However, I would have preferred to see a much narrower margin with NLs leading. i.e. it indicates that more sell-off is to come.
2. The stocks that went-up in the morning rout retraced some gains in the after-noon and the stocks that went down in the morning have recovered a lot by the close. The way I look at it is this: a lot of intra-day trading is going on by big-money. For them it is a sureway to lose money in the intermediate-term.
3. The AN recovery in many techs tells me that MMs made a successful attempt to close them at or near a key strike price: AMAT at 30, MSFT near 130, cisco near 80 (pre-split) and Intel at 70. Whether these levels are significant from technical view-point or not, a lot of today's action in some stocks indicates hedging related activity. Thus, I wouldn't read too much in to late recovery in techs.
4. In general, the notion that there is a lot of money chasing still un-brocken or less brocken stocks seems to have some credence. i.e. A lot of "trading" is going on to take advantage of the price swings which in itself is causing to the price swings. We have to see if more earnings warnings will take wind out of this market or not. Bulls may feel stronger by holding on to their positions and see the markets reverse. It doesn't do them any good if more of the bulls don't join them. Short-covering only last a few short-days. Then what?
They sell to whom?
I am calling for a big down-day on next Tuesday due to poor breadth today. If Tuesday is not it, it will be the Monday the 29th.
Good luck!
-Mohan |
