Do You See What I See?
When I told you on
Thursday morning
that this 1200-point rally smelled like every other
bear market rally, little did I know that the market would be cheesed, over
the next couple of days. The big question is whether this is just a pullback or
something much worse.
Simply put, I just don’t believe we are in the last inning of the bear market. I
am hearing all kinds of talk, already —
believe it or not, already — thatÂ
Wednesday, July 24, was the bottom. I don’t think these pundits are watching
what I am watching.
If they were… they would see that the Semiconductor
index
(
$SOX |
Quote |
Chart |
News |
PowerRating) hit seven-year lows on Friday. When the SOX was
strong, everyone said it was an important index that would lead us into a new
bull market. Now that it is heading down, you don’t hear that about it any more.
They would see that the Dow Transports have
come straight back down.
They would see that every major index is still way
below their respective 200-day averages.
They would see that every…and I mean
every sector in the market is now in a
downtrend. This can only repair itself with time.
They would see that World Market Averages
are going along for the ride…and in case you haven’t looked,
Latin America is acting like it is
merging with Enron.
They would see
that a ton of names topped out on Thursday, right at their declining moving
averages.
They would see that, once again, the permabulls are out in force talking about
the bottom. They keep telling you if you miss the best 10 days of the year, you
will miss out on big returns. They forget to tell you what it would mean to you
if you missed the worst 10 days.
They would see that they have already forgotten about the fact that the
1200-point rally was borne out of a 2800-point drop.
I am just not seeing anything that even remotely looks like the end of the bear
phase. Can the 7500 level be the low? Sure it can. But it is my contention that
the type of damage that has been done can only be repaired with time and with a
process of retesting…and retesting…and retesting. It still amazes me
how so many keep predicting without the study of past bear markets.
Here are several things I need to see before I could believe a decent low has
been put in.
-
Breakdowns
would have to cease…and I am still finding too many on a daily basis. -
There is no way
the market can get legs without leadership. Leadership is non-existent.
-
A solid base
would have to be built. Bases happen over time and at the same price. If the
market can pull back to the lows and hold the levels for several weeks…and
then move up, I would feel better. -
I want to see
rallies being doubted. I long for the Business Week cover entitled
“DEATH OF STOCKS.” This occurred in 1982.
Until next time,
Â
Gary