This Is Starting To Feel Like…

First off, my stance has not changed. Longer-term, technically, the markets
remain in trouble. The chart put out in my
last report
speaks for itself. The
S&P 500 long-term chart is one of a big, giant, humongous top…which will not
easily be resolved. But right now, it is vital that you separate the short-term
from the long-term.

As I have stated in my
past couple of reports, short-selling had become
downright too easy. Whenever things get too easy, you have to watch for a turn.
BUT…you must put any turn into context. Any turn is not out of strength but
out of enormous weakness. Just look at the charts of the DOW, NASDAQ, NASDAQ 100
and the S&P. After the drop of the past 6-7 weeks, somewhere along the line, the
market had to pick up its bootstraps. Most stocks and indices were just so
oversold, both on a price as well as sentiment basis.

So…how is one to play this? Well, if you are me, you sit back and look for
leadership to show up…and right now there is slim pickings. This is somewhat
amazing after a 300-point, one-day rally…and a testament to how bad things
have become. Right now, the NEW HIGH LIST is as barren as Michael Jackson’s
musical career.

Over the past few months, leadership has done nothing but break down.
Every…and I mean every breakout has failed miserably. It has not been much
better for the areas that were working well. You do recall all the strategists
telling you to “just buy small and mid-cap value.” This was of course AFTER the
small and mid-cap value rally. You may want to now check out the
(
MDY |
Quote |
Chart |
News |
PowerRating),
(
IJR |
Quote |
Chart |
News |
PowerRating)
and
(
IWM |
Quote |
Chart |
News |
PowerRating) charts…broken down.

You probably can expect more upside testing.. but until the market proves
itself, I will continue to NOT give it the benefit of the doubt. Why should I?
Amazingly, there has not been one rally in the S&P and the NASDAQ of more than
12 days since the beginning of the year and only two rallies lasted more than 8
days…one starting on Feb 22 and the other on May 8. Most rallies have lasted
less than 3-5 days. This is telling of a market that is out to get you in a big
way.

Keep in mind, rather than listening to all the geniuses telling you where things
are going to be by the end of the year, understand that these targets are not
important at all. You only need to know what’s happening now to stay ahead of
the game. ..and it is a simple game.

You see, you can’t hide institutional buying. If the market wants to get going,
it will stick out. You will see it in high volume days to the upside, light
volume days to the downside.

You will see it with the masses doubting the move.

You will see it because it will rally on bad news.

You will see it because the stairsteps will finally be moving up and not down.

You will see it as the NEW HIGH LIST expands as more and more quality names
break out. ..but until that day comes, learn a lesson from every other rally of
the past 2 plus years.

It is the same lesson I have been telling you about for 2 plus years.
Bear
market rallies are short, sharp, make you feel good, gets every one talking
about “the bottom” and then buries you soon after. I have nailed every one of
these rallies as just that…bear market rallies…and after just one day of
this latest rally, it is starting to feel just like all the others.