Just Follow The Bouncing Ball
As you know,
I preach that I have no idea where the markets are going to be down
the road. I have no idea what things will look like…even next week and don’t
try to predict such things. I have been taught that all you really need to know
is what’s happening today. That’s all that counts.
So…when I tell you I think the
markets are very close to fishing or cutting bait…it’s not about predicting.
It is about what I am seeing in the market place. I just don’t think the market
can stay in this trading range for long. AND…believe
it or not, I am not so sure which way it breaks. But the day it does break, I
will be all over it and know exactly what to do and how to handle it.
I am seeing things on several fronts
that go against each other. Don’t get me wrong, I am still finding breakouts,
breakdowns, sector moves — both up and down.
Here are my thoughts.
The positives:
Both the Dow and S&P 500 have held
support on this pullback. The Dow at 10,300 and the S&P 500 just above its
50 DMA at 1128.
The New High
List continues to be in good shape but quality is not very exciting.
Still a lot of low priced, low volume names.
More sectors are in good technical
shape than not. Leadership can be found in Cyclicals,
Gold, Oil Services and Financials.
BUT…time
to look at the Nasdaq. As you know, I have been negative on Tech
for quite a while. Tech has basically showed
no ability to rally. The only sector in Tech that has a semblance of decent
charts continues to be the Semis. But I am now
starting to notice the drop in the Nasdaq “feels” like it could be
exhausting itself…meaning the selling could be drying up.
So…that’s the good. The technicals are shaping up. It is not hard to look at
charts and understand that. But then I look at sentiment…
The VIX, VXN,
PUT/CALLS are all very worrisome. I have never seen a market lift off
from the numbers I am seeing. Maybe the market doesn’t have to crack…but then
I add in the BULL/BEAR numbers. Bulls are too high
and bears are too low. And finally, the AAII survey just indicated that
individual investors are 11% bearish…The lowest numbers since the Titanic. I
have never seen the wrong way crowd get it right.
So…conflicting signals for Gary.
Guess what? I give the technicals more weight but not forget the rest. I will be
looking for a high volume monstrous day real soon to tell me which way this
ultimately goes. I will also continue to watch for high volume, quality
breakouts. The more, the better. Just follow the bouncing ball.
Happy Holidays to all
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