Why It Doesn’t Feel Like We’re Rolling Over Here
Admittedly, the market has showed us very little to cheer about
over the past two weeks. We have seen leading stocks fall below their 50-day
moving averages, most major indices themselves are trading below their 50-day
MAs, and distribution* seems to be creeping up every few days. Even today, the
S&P 500 pushed higher, but on lighter volume. Yet things just don’t have the
feel of a pending rollover to new lows in the market.
Why could this be a good
thing? For starters, the market never goes straight up and even Bull Runs
need to take a breather, correct and re-fuel. Many recent leaders have fallen
from their highs, but are only a stone’s throw from pushing back to
respectable levels. Ebay, for example, is trading
around 101.50. Its 50-day moving average is around 106. $4.50 is not a very
big move for this stock if the buyers step back up to the plate.
The market does look ugly
right now, and that is usually enough to get heads turning the other way,
especially after the three-year Bear Market we saw. From the S&P 500’s recent
high of 1015.35, despite all of the recent distribution, we have only seen
about a 5% decline. Anything under 10% is a correction and nothing more.Â
It may not take long before
the market’s tone changes and underlying buying becomes more evident. At that
point, leading stocks will probably begin poking their heads up quite
quickly. It will pay to take notice when this starts happening.
Have a great weekend,