Comments from another market timer, this is from tonight and his
perspective is worth considering.
Today's market was reminiscent of the market days from late July through mid-August when the Dow had a great day, but the overall market performed relatively very poorly. Look, for example, at August 17 when the Dow was up almost 150 points. On that day there were only 165 more stocks up than down on the New York Exchange and there were far more 52 week lows than 52 week highs. Today the Dow was up almost 130 points, but there were only 123 more up than down stocks and there were only 43 new highs versus 105 new 52 week lows. Mind you, the overall market was up from the start as neither the S&P nor the New York Exchange was ever down for the day. When that occurs, and you still see a larger number of new lows than new highs, it means that the market internals are ugly. That is confirmed by the daily advance-decline line which is now below virtually every important moving average between 10 days and 900 days. In other words every moving average to as far out as 3 ½ years long. We expect today's rally to turn right back down as early as tomorrow morning, but the fact that this is December, a month notorious for its cross currents, and the fact that we have already allowed that it is still possible to see new highs on some of the popular averages as we indicated in our recent newsletter prevents us from getting excited about ultra-bearish possibilities just yet. The Dow downside projections given yesterday remain in effect, but another big up-close tomorrow could invalidate that.
Best regards,
John
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