My Latest Scans Make Your Job Simple

Lots of Thoughts

I received questions over the weekend ranging from, “Are we in a bear
market?” to: “Was Friday’s action a bottom?” Both my answers are an emphatic
“No,” but the answer needs more explaining.

While I don’t believe a bear market has started, I do believe many
stocks and more than likely, a decent number of sectors, have topped for this
bull move. This basically means they can bounce, go higher, but will not revisit
their highs. Simply put, I do believe we are in the late innings where you will
no longer be bailed out.

On the other end, no, actually, no way do I believe Friday was the
bottom, maybe just a near-term low. I say this because of one simple
characteristic…volume was lame. There was simply
no conviction. It smacked of short-covering. Another reason I say this: The
biggest winners Friday were the stocks that were hit the hardest…just a very
oversold bounce.

Other Notes

• The New High List has contracted down to miniscule
  numbers.
• There is a now a lack of good bases to buy off, as
  most charts are a mess. At a minimum, it should take weeks to repair some of
  the damange.
• Major indices are now below their 50-day
  averages–but the good news is that they are not below their longer-term
  averages.
• Volume patterns have been gross–and that’s being
  nice. As I have told you, the only outcome of lower-volume bounces and
  higher-volume drops is lower prices. That is exactly what happened.

After doing my scans this weekend, your job is simple. Sit
back and relax. For every good-looking setup like
(
EBAY |
Quote |
Chart |
News |
PowerRating)and
(
LXK |
Quote |
Chart |
News |
PowerRating), I
can show you 10 to 20 that are ugly. In fact, I can argue that any further
bounce will set up hundreds of stocks for potential shorts as they bounce into
resistance.