Waiting For Confirmation
It was great
to see a rally with such force, although I would not read too much
into it…yet. The Dow’s
(
INDU.X |
Quote |
Chart |
News |
PowerRating)
follow-through happened far too late to convince me that institutions are ready
to begin a buying spree. At this point, I am waiting to see a follow-through
confirmation on yesterday’s move in the S&P 500
(
SPX.X |
Quote |
Chart |
News |
PowerRating) or the Nasdaq
(
COMPX.X |
Quote |
Chart |
News |
PowerRating).
I would like to see this between next Monday and Thursday.
Several factors lead me to caution in
the current environment. First and foremost, the market has yet to deliver solid
evidence that it is ready to rally through its recent price and volume action.
Secondly, there is an abundance of optimism. Bullish investment advisors stand
at 47.9% vs. 29.2% that are bearish. The put-to-call ratio is less than 1
after only 1 solid rally day. The VIX stands at a mere 24, vs. a high of
57.31 in September. Lastly, as I always say, the final confirmations are solid
stocks breaking out of bases and leading the market higher. There are very few
stocks to hone in on right now.
Flir Systems
(
FLIR |
Quote |
Chart |
News |
PowerRating) broke out of its base yesterday. Besides the market, the
company’s industry group (among other things) points to limiting the move it is
able to make.
In Peter Navarro’s article Tuesday, MKSI
And A Double Dip Recession?, he quoted Bill
O’Neil from a very good
article in Tuesday’s IBD (p. A19).
It provides an excellent comparison for today’s market to that of other
declines such as 1929. It also includes some points on the potential recovery.
Meanwhile, rather than trying
to form thoughts and opinions on what to do next, we should let individual
stocks and the market dictate or investing. For now, with very little to do,
cash remains a safe answer. Over the weekend, I will be scouting out potential
buy candidates for a possible follow-through next week.
If you have any comments or questions
for me, please feel free to use my email link below.
Have a great weekend,
Â