What’s Giving Me Serious Food For Thought
There are times where I like to be short and to the
point with my commentary. Today is one of those days. A few important
notes:
Wednesday’s action was the first real distribution day of 2003. A distribution
day is a drop on heavier volume. One day of distribution does not make the end
of a rally phase. But add a couple of more…and what could have been nice base
formations…turn into failures, breakdowns and downright ugly.
I do need to make note that throughout this latest rally phase, I would find on
a nightly basis, many stocks that would break down in differing sectors. Last
night was another case in point as 252 stocks broke below their 50-day averages
and another 134 broke below their 200-day, long-term averages. Serious food for
thought.
I can now count eight times in the past three years that the
S&P 500
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its declining 200-day average. Many pundits believe that a move above it would
be very bullish. I am not so sure, as this long-term moving average has been in
freefall.
Sentiment remains too
bullish. In fact, the percentage of bullish advisors is now back up to 50% and
the
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Lastly, throughout the past three years, the one lesson that sticks out more
than anything else is the amount of failed breakouts. While there will always be
some leadership, eventually, it fails. For example, yesterday, it was
Immucor
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turn.
This market remains as tough as ever for the intermediate-term trader. I urge
you to go slow and wait for leadership to REALLY
show up…leadership where one does not have to look over one’s shoulder…
leadership where you can hold a stock for a year while watching it double and
triple. Maybe one day.
Gary