It's not that simple. No one hedge fund has enough money to move the entire market.
We individual investors still rule in the stock market just as consumers rule the economy.
And yes, programmed trading does make up a huge proportion of daily trades but ultimately it does not change the trend much at all.
Kirk, you are an intelligent guy.
I think you are capable of learning what I am saying is true will actually be true in the long run. Then I expect you to add discussions of volume and market breadth to your newsletter and Seeking Alpha articles.
I am fine with that. I don't care about fame, or making money, except in my own account.
I do care that we can teach others to be better investors as we learn to do the same ourselves.
So that is why I am sharing this information.
Where the market goes from here is not just a function of volume, because volume truly does lead direction, but also market breadth.
It certainly is not just a function of sentiment.
Our discussions over the years have got you looking hard at market sentiment as if that can lead you to better time your entries and exits in stock positions.
It can but it's not going to be enough. For a lasting bottom to form here we need not just higher volume on the upswing for the market but also a broad based rally.
You have correctly noted some of the sectors that are under performing. When a lasting bottom is in they won't be under performing anymore. A long term market bottom will lift nearly 90% of all stocks in every conceivable market sector on higher volume than the immediately preceding downtrend.
Small caps will be one of the leading sectors in that advance as well. As will the SOX.
It will happen. You will see if happen because I will be posting charts and market data on it when it happens. We all make mistakes. I make a lot of them but major trend changes like a stock market bottoming need not be one of them ever again.
There will be no excuse for even me to miss that market bottom.
So far we have bad enough sentiment for a long term bottom..
However volume and market breadth points to further downside ahead even if we rally higher for the immediate future.
What kind of event could make my predictions wrong?
QE-3 lead to this kind of market turning event in 2011.
The charts, volume, market breadth and sentiment all showed it happening. But what can the Fed do now?
I don't think they intend to do anything but let the market trend play out while we wait to see what kind of new policies are implemented after the elections in November.
Kirk, you can make a difference in the future for a lot of people. You will see how important volume and market breadth really are concerning future market trading direction. You can then share that with your readers.
JMHO, which will be either proven right, or wrong, as time goes on but we will have ample opportunity to discuss it along the way.
RtS |
