Here’s why I remain bearish
The “rallyâ€, for those that insist on calling it that (I
prefer bounce) is looking very weak for the broad market, and is officially over
for some areas of tech. The Semis have taken out their June lows. The Nasdaq 100
has taken out its June lows. Several other groups are at or near those levels as
well.
Since June 13th, which is the day the broad indices closed at their lowest
levels, the major indices have done the following:
| S&P 500 | +2.9% |
| Nasdaq Composite | +0.9% |
| Dow Industrials | +2.9% |
A few of the leading groups since June 13th include:
| CBOE Gold Index | +25.7% |
| CBOE Oil Index | +17.7% |
| DB Commodity Index | +9.7% |
Oil and commodities are not typically capable of igniting and
leading a broad market rally. Groups that typically lead market rallies off of
significant bottoms include Retail, Technology and Financial. Here’s how some of
them look:
| Semis | -3.8% |
| Nasdaq 100 | -1.0% |
| Retail | -2.6% |
I am not seeing buying enthusiasm in important areas. I am not
seeing breakouts with strong follow-through in individual issues. Disappointing
earnings, especially in tech, could really make things ugly. I remain bearish. I
continue to believe the major indices will make new lows. Defense and capital
preservation are the primary goals in this environment. Nimble traders can play
short-term opportunities to scratch out some gains.
Best of luck with your trading,
Rob Hanna
For those who may be looking to expand their
knowledge beyond just market timing, my
Hanna ETF Money Flow System utilizes the VIX in generating trading
signals for spread trades.
Rob Hanna is the principal of a money
management firm located in Massachusetts. He has spent the last several years
developing and refining methods for trading in stocks across multiple time
frames. He selects stocks using both fundamental and technical criteria, and
then trades them using technical analysis techniques.