What The Market Is Telling Me

  • February 13, 2003
  • Tim Truebenbach

The market may very well be trying to tell us something
through today’s trading. The
indices were unable to decline further, but volume came in heavier than
yesterday on both the NYSE and Nasdaq.

The past week of trading has seen the market decline
almost every day. The declines
have been appearing on lighter trade and that has been troubling because they
will usually end when the selling is exhausted. Many times, this can happen through a climax sell-off. Even smaller declines or corrections may show this trait towards the
bottom. Two secondary indicators
that say this may be happening can be found in the sentiment on the street and
new 52-week lows.

  • Out of the people I speak with, meet with and get emails from; I
    have yet to run across someone that thinks this market can rally or should be
    bought. The bottom line is that
    when everyone is out of the market, there is nothing left to drive price
    lower. Bulls made a nice drop and Bears are rising as found in Investor’s
    Intelligence.

  • Monday’s trading produced 47 new 52-week highs vs. 223 new
    52-week lows.  This is getting
    pretty extreme and may be tending towards a rally real soon. 

One thing I will say is that such indicators as the
Put/Call and Volatility Index seem to think this market has further to go. Ultimately, price and volume will tell the tale and right now it says
to stay on the sidelines. We have
also started to see the final standouts from the recent rally in early January
take it on the chin. Marvel
Enterprises
(
MVL |
Quote |
Chart |
News |
PowerRating) is an example that has been hit for five straight days.


 

At this time, we are looking for the major averages to
begin a rally and follow-through 4-7 days later. Until this happens, it’s best to avoid new purchases and preserve
capital. Spend the time brushing
up on rules and studying past mistakes. 

Important Notes:


  1. I
    will be in
    Denver, Colo., next Wednesday through Friday.  If
    there is anyone interested in getting together, please email me and we
    will try and schedule a time to “talk shop.”

  1. In
    the meanwhile, I will leave you with an entertaining song a friend of mine
    wrote and performed that fits the market we are in better than I can
    describe! The title is “Bear Market Blues” and you may hear it on CNBC
    or eTrade radio very soon. 

Have a great weekend,

Timt@tradingmarkets.com


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