The Schismatic Market
And the
dichotomous market continues.
The accumulation-distribution score is
1-6 over the past three weeks in the Nasdaq.
Looking at the bells Monday, the 5%
loss in EMC
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The difference is that the former was
the last of the Mohicans — the last bell to hold up — whereas the latter has
been “done” for some time.
That’s something that you, as an
intermediate-term practitioner, should be well aware of.
For leadership, as a means of allowing
you to understand sentiment at the margin, necessarily must focus on the
strongest names, be they bells or glamours.
@ The Venetian, I spoke of how the
clearing of the top of a base is not only the pivot pivot, but also the pivotal
point, “where the rubber meets the road.”
Although this pertains to big averages
like the Naz, S&P, and Dow, it is in the world of the individual stock —
the micromarket — that this applies the most.
Given the timidity of most investors
to buy a stock as it hits new high ground, the behavior of a stock after it
wades into uncharted waters is of tremendous import.
Its behavior gives you valuable
information as to the underlying sentiment within that issue.
Sentiment that is quantified in $,
available for all to see.
Late in an intermediate bull move,
institutions, sensing that the jig is up, will often use the breakout of a base
or trading range as an opportunity to dump positions.
This is the easiest time for the big
player to exit.
Indeed, many tops are formed in just
this manner.
And so the glaring failed breakouts in
important swingers like BEA
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Ciena
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etcetera, were of exceptional import for the alert intermediate-term operator to
recognize.
Some of these broke out of legitimate
bases and failed.
Others broke out of
“illegitimate” bases, or abbreviated zones of four weeks or so.
Either way, the message is, and has
been, clear.
Tech is simply not ready.
Learn to look at the market through
this set of lenses — i.e. through the action of the stocks themselves, and not
through the opinions of analysts, strategists, gurus, and the like — and you’ll
find the market making more sense to you.
More sense, as in more cents.