To: TigerPaw who wrote (81317 ) 11/19/1998 11:33:00 AM From: D.J.Smyth Respond to of 176388
for those who despise TA: (this posted today on DTN) Overbought market unable to rally on Fed ease by Stewart Winograd DTN Stocks Editor "The market's response to the latest Fed easing has been very mild," Christopher Cadbury, editor of the Cadbury Fax Service newsletter in New York, told DTN Thursday. "The market is way, way overbought and due for a correction," Cadbury said. "The S&P 500 has risen 25% from its intraday low of 923 to the intraday top of 1152, and that's without a pullback of more than 2% on a closing basis," he said. "I can't find anything like that before," he said. "Also, there was a very large uptick reading Tuesday, +1127," Cadbury said. "Uptick readings that high are seen only five to ten times a year," he said. Volume has not been supporting the latest price rise, Cadbury said. "Wednesday's New York Stock Exchange volume (655 million shares) was the second lightest in 13 weeks," he said. "Tuesday's NYSE volume was the lightest for a Tuesday in seven weeks. Monday's NASDAQ volume was the lightest for a Monday in seven weeks." Breadth is also lagging on the rally, Cadbury said. "The McClellan Oscillator fell to a negative reading yesterday, minus two," he said. "That's not a bullish sign at all, and unusual after such a strong rally. It shows that breadth is bad, and breadth tends to win out in situations like this." Cadbury also said that sentiment has gotten bubbly of late. Investors Intelligence of New Rochelle, N.Y., reported Wednesday that 57% of investment advisors surveyed last week were bullish, the highest since January 1992. That said, Cadbury expects a correction within a bull market, not a bear market. "The market is likely to go much higher next year," he said. "Equity funds continue to draw cash."