Small Signs
Yesterday’s market action
following the Worldcom blowup gave the bulls another small ray of
hope — hope that the market may avoid a complete meltdown in the near future.
Reversal action within the course of one day, where the market opens down
hard but manages to close significantly higher from where it opened, especially
on near-climax volume (almost 2 billion shares yesterday), is often indicative
of a short-term bottom. See the chart at
the bottom of the page. One of the still-missing
elements in any bottoming discussion is the VIX, which has not reached the
levels we saw near the Sept/Oct 2001 bottom. Yesterday’s
VIX reached 36, while the high level in 2001 was about 57.
I also need to see tremendous upside breath and price momentum before
calling for anything other than a temporary respite from the bear trend.Â
The Mid-Cap
(
MDY |
Quote |
Chart |
News |
PowerRating), Pharmaceutical
(
PPH |
Quote |
Chart |
News |
PowerRating), Software
(
SWH |
Quote |
Chart |
News |
PowerRating) and Biotech
(
BBH |
Quote |
Chart |
News |
PowerRating) sector ETFs put in good relative strength
performances vs. the broad market indexes yesterday, though nothing to get too
excited about yet. I issued a short
recommendation in the Gold sector
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) in my nightly
ETF service yesterday. The correction
in the gold stocks that began in early June looks like it may still have a
little further to go before exhausting itself; longer term, I am still bullish
on this sector.
Cheers
