Don't you get it, ratan? <g> Don is intrinsically a bull by reading in the lines of his posts. If I may conjecture here, Don is a very conservative, moderate ecclecticist who does not wish violence to the world nor to the market, his dictum being "riding the ripple" and a moderately up or down stream is where he swims best. However, his research is thorough, concise and sharp. One point I want to second (as Don has pointed out) is the crossing of the 50 day and 200 day ma. This is a very critical joint, up or down. Taking into account what's happening and will happen short-term globally, suffice to say there is almost nothing that could be construed as positive. So if the downtrend in the short term is still intact, and the 50d crosses the 200d downward, it should be considered a watershed is being breached.
By the same token, things could get even uglier in the Composite Index. If Don's guitar theory works, one could expect a more volatile scenario in the tech sector where the biggest fall could come from pillars like INTC,CSCO and DELL (per my bias). The Composite mirrors the DOW almost unequivacally except that the former has more elasticity, hence possessing teh potential of a wilder swing than that of the DOW. Its 50d is now sitting at about 50 points above the 200d ma while both averages for Dow are at a junction. It could very well portend a much lower downside on a percentage basis for the Composite come a big Kahuna day and that day, as I concur, could very well be Monday.
I somehow have a feeling about the imbalance between the big caps and small caps present in teh market right now. A huge disparity in between doesn't bode well for teh market. To use an analogy, it is like you only have strong bones but the muscle and blood conditions are very poor to pop up the overall health which eventually would erode the bone condition. What we have seen, albeit kind of unexpectedly, in the rebounding of some of the small caps may be a sign of the bettering of condition of the overall market, indicating a bottom for the small caps. My belief is in order to get the market on track a balance should be achieved between the big caps and small caps and in order for that to happen, a correction is warranted the big guys bend down to leave some room for the small guys. Sounds too liberal? Well, good thing I am not in Bill's position.
Again, I look at Don's Index Update every day and I think its lesson du jour for me. Don the man. |
