Can’t We All Just Get Along?
Here we go
again. The first decent rally in the Nasdaq in a few weeks and talk
of a bottom again. I don’t want to throw cold water on any rally but I think one
must learn from the past. Before I go into the past, I must say that yesterday’s
move up in the Naz probably puts in a near-term low. After all, a drop from 2900
to 2400 in short order deserves a bounce. The big question is how long it lasts
and how far it goes.
So take a look at the Semis.
(
AMAT |
Quote |
Chart |
News |
PowerRating),
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
NVLS |
Quote |
Chart |
News |
PowerRating), and
(
TER |
Quote |
Chart |
News |
PowerRating) should be looked at. Big-volume up days, light-volume down days over
the past 12 weeks. This is how bottoms form. Not over a few days but over weeks,
if not months. Bottoming after huge drops is not an event, it is a process.
Notice how AMAT held the lows over a period of time. Somehow, I believe that
this is how the Naz will have to look before it starts the real move up. The
good news is that a line in the sand is starting to be put in at the 2300-2400
level. The operative word is starting. There are still no decent
breakouts and a ton of resistance lies ahead.
Back to the past: How many times since March 2000 has the market made fools of
the masses? Many! Go slow. There is no reason to back up the truck just
yet. The intermediate trader has slim pickings in breakout land. The New
High List is still being led by Regional Banks, REITs and S&Ls. Not
exactly market leadership. The short-term trader has a decent play for names
coming off their lows. Keep in mind, buying off lows can be treacherous. Many
sinkholes over the last year.
The rest of the market reminds me of the phrase, “Can’t we all just get along?”
As soon as the Naz does better, the rest of the market starts selling off. The Dow
has definitive resistance at 11000 and the S&P is all over the map. I
suspect they will stay under pressure near term.
Last but not least, bullish sentiment finally eased off of the 14-year high. The
percentage of bullish advisors dropped from 61.8% to 57.8%. This, of course, happened after the recent drop. This is still a high reading but I am
grateful that the wrong-way crowd finally reacted to the latest move down.