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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk -- Ignore unavailable to you. Want to Upgrade?

To: Runomo™ who wrote (29453)	1/30/2008 7:49:49 AM
From: da_cheif™	Respond to of 208109

Advisor’s optimism continues to fade with the bulls down to 40.2% this week, from 41.6% previously. We had hoped to see a larger shift but the very steep decline and rebound had some editors quickly commenting that a bottom was at hand. Other advisors noted the surprise Fed rate cut last week and anticipated another cut this week that would somehow make everything ‘right’. Noted market analyst Marty Zweig said years ago that it never paid to ‘fight the Fed or fight the tape’. The Fed now seems to be reacting to stock markets around the world and when action nears panic stage they cut rates. The overall economic news has been mixed, with continued weak housing, while durable goods orders soared 5.2% in December. The bears increased to 32.2%, up from 31.5% a week ago. That is their highest level since August 2007 when we noted three weeks at 37.4%. We had expected more bears but some of the former bulls moved to the correction camp, which increased to 27.6%, from the former 26.9%. This group of advisors looks for a near term drop in stocks, but sees it as a potential buying opportunity. These are potential bears, as many editors shift from bullish to correction, before turning bearish. Markets have experienced another wild ride with solid rebounds after lows last Tuesday and Wednesday and then renewed weakness to end Friday’s trading. Prices were generally higher at the start of this week, again showing some wide intra-day swings. Volatility persists. The further drop in bulls and increase in bears has the sentiment readings at their best levels [for a market rally] since last August. Some other elements are also shaping up for a rally. Last week’s wide swings caused an incredible 1,385 selling climaxes, by far the highest level in our history! That signals major accumulation amongst stocks trading at their yearly lows. We also see reports that corporate insiders are now net buyers of their shares. That occurs after a big decline that they believe is near an end. Sentiment readings are now overall bullish. The difference between the bulls and bears is now 8.0%, down from 10.1% a week ago and again moving in a positive direction. That is a big shift from mid-December when the spread was 34.1%. That was close to the bearish spread in the 35-40% range that occurred in October. The early October 2007 market high saw a very negative sentiment difference at 42.4%. By Thanksgiving the reading had contracted to neutral levels, and it just missed a buy signal. A bull-bear difference that narrows to around 15% (or less) and then expands provides a buy signal. That was the late August 2007 signal, the spread was a very bullish 3.2%, and before that on 14-March-2007 [16%], and in June 2006 [0% difference]. The recent contraction for the Bulls/Bearish difference chart is another positive signal