GZ
I have not posted or lurked on this thread for sometime, but I came out today looking for the consensus....and I guess to add my 2 cents
the Aug to Oct 8 sell-off this year resembles quite strongly the sell-off which occured in Aug/Sept 1981
what strikes me coming out of this year's sell-off is the strength in multiple technical indicators I use:
- 9 to 1 volume (twice:9/8 and 10/15)
- Zweig market timing model at a max bullish reading of 10
- a strong buy signal from an advance/decline model I use
- a strong buy signal from the new high/new low indicator I use
but what strikes me as curious, is that the 1981 sell-off was followed by exactly the same strong readings in all the indicators mentioned above, except the 9 to 1 volume indicator
what I conclude is that strong indicators do not themselves guarantee a resumption of the bull market, though we have surely experienced a very strong rally
and in spite of the rally, there are several disturbing indicators, one of which is the Mamis advance/decline oscillator, which, until Friday had been declining as the Dow made its most recent highs; and the AAII and Investor Intelligence bullish readings are at very high levels (I have never seen the AAII investors so bullish); and finally the clincher is in the the open positions of large commercial hedgers in S&P 500 futures contracts - while the commercial hedgers are still net long, their net long positions have decline by 32,000 contracts since the Oct 8 low - this is a very very negative divergence with the Dow's performance
In as much as the S&P 500 hs been up for six straight days, I would expect the odds for down day on Monday are quite high, the question would be whether the market continues to rally or begins another decline.... my money is on a new decline
Bob |
