It’s A Start
Sentiment is
poor. The percentage of
bullish advisors is rising and put/call ratios are complacent. But guess what?
Day by day, the action is becoming more constructive. Instead of the Nasdaq
wedging up after a drop, it pulled back from last week’s monster one-day gain,
retested and followed through.
I wouldn’t classify it as anything close to powerful, but it’s a
start.
Everything I have said in the past few weeks remains. There are still hardly any quality breakouts in the growth
complex. Most of the moves on the good days are stocks coming off of deep drops, but this is the way a market tries
to repair itself. A lot of names have held their lows for several weeks and are now moving off
of them.
I also like the market’s resiliency in shrugging off bad news recently. The drumbeats of
downgrades, recession talk and bad earnings are being shrugged off. In other
words, the market is finally putting up a fight for the first time in a good long
while. Bad news by Nokia and Cisco has not derailed this latest move either.
Semis continue to act admirably. Surely, it is still a mixed bag, but again a
start. Many are now coming nicely off their lows.
Several financials are setting up nicely.
Advance/declines continue to improve and the new low list has contracted. The ugliest stocks are not going down any more.
Lastly, a little indicator I have used for years is now improving. It is called the “last-hour indicator.”
I learned this from the great technician
Stan Weinstein. It is based on how the market finishes a day. Have you noticed the
better finishes over the past few days? This is a complete 180 from the past few
months. This is the big money making big bets and not being afraid to hold overnight.
I have studied this for a long time. It is amazing how well it works. I have found a direct correlation between solid finishes and better market
performance for the near- to intermediate-term. I urge you to start watching this indicator.
In the meantime, stay focused and commit more time to the process. I am still not sure if this is going to get
legs. There have been plenty of false starts. With the Fed in the market’s
corner, it could have a shot. I am just going to play it day by day and not force the
issue. There is still a lot of damage to repair. Â Â