More of the same
This happens a couple of times a year. I am starting to run out of ways to say what I see happening. It's difficult to tell the same story over and over when I have been on the wrong side of the fence for a few weeks. But, I am seeing more of the same. When I look at the indicators today, I see a market that needs a rest. This is what I saw last week as well.
The market does not look at the indicators and then react. It's the other way around of course. The indicators are telling me more than what the market is actually doing. They tell me when things look to be at extreme levels of being either overbought or oversold for example, at any given time. When several indicators start to line up, I play the percentages and make the higher odds move. Lately I have been leaning toward being overly cautious as I want to conserve my assets before what I believe will be a very good year in 2006. That cautious stance has led me to miss this latest rally as I waited for a pullback that has yet to materialize. Eventually it will but I never know exactly how far it will go before that happens.
As well as being overbought, the market is now coming up against some resistance and, as I mentioned Friday, "the herd" is getting overly bullish again. That's why I think we need a pause.
Chart provided courtesy of www.decisionpoint.com
I think a move to 1200 or 1175 is in the cards and will give us that last really good buying opportunity before a strong bull market. Buying now would be chasing in my opinion. Buying slowing on the way back down would be more wise.
We are seeing some unusual internal behavior in the market right now. On both Wednesday and Thursday of last week, the NYSE saw over 100 stocks making new 52-week lows, even as the index is up almost 5% in the last 20 days or so. Friday saw 86 new lows.
Thursday the Dow was up 95 points yet 131 stocks saw new lows while just 139 saw new highs. Let's compare that to a normal 4% plus rally over the same period of time (less than 30 days).
Chart provided courtesy of
www.sentimentrader.com
I'm not sure exactly what to make of this because according to sentimentrader.com, this has never happened before. It seems like a negative sign and some may blame it on the action of bonds, but even when bonds did poorly during rallies in the other instances of the examples above, the market still did well internally. This unusually high number of new lows in this strong of a market is unprecedented.
We have another great item for sale in The Gallery. Please check it out.
That's all for today. Currently 100% G fund. Still waiting for a better buying opportunity before getting back in the stock funds. Thanks for reading.
This happens a couple of times a year. I am starting to run out of ways to say what I see happening. It's difficult to tell the same story over and over when I have been on the wrong side of the fence for a few weeks. But, I am seeing more of the same. When I look at the indicators today, I see a market that needs a rest. This is what I saw last week as well.
The market does not look at the indicators and then react. It's the other way around of course. The indicators are telling me more than what the market is actually doing. They tell me when things look to be at extreme levels of being either overbought or oversold for example, at any given time. When several indicators start to line up, I play the percentages and make the higher odds move. Lately I have been leaning toward being overly cautious as I want to conserve my assets before what I believe will be a very good year in 2006. That cautious stance has led me to miss this latest rally as I waited for a pullback that has yet to materialize. Eventually it will but I never know exactly how far it will go before that happens.
As well as being overbought, the market is now coming up against some resistance and, as I mentioned Friday, "the herd" is getting overly bullish again. That's why I think we need a pause.
Chart provided courtesy of www.decisionpoint.com
I think a move to 1200 or 1175 is in the cards and will give us that last really good buying opportunity before a strong bull market. Buying now would be chasing in my opinion. Buying slowing on the way back down would be more wise.
We are seeing some unusual internal behavior in the market right now. On both Wednesday and Thursday of last week, the NYSE saw over 100 stocks making new 52-week lows, even as the index is up almost 5% in the last 20 days or so. Friday saw 86 new lows.
Thursday the Dow was up 95 points yet 131 stocks saw new lows while just 139 saw new highs. Let's compare that to a normal 4% plus rally over the same period of time (less than 30 days).
| Beginning of Rally | Date Rally Reached 4.5% | % Gain | # Days | New Highs | New Lows |
| 08/05/03 | 09/02/03 | 5.9% | 19 | 425 | 5 |
| 03/24/04 | 04/02/04 | 4.6% | 7 | 343 | 28 |
| 05/17/04 | 06/07/04 | 5.2% | 14 | 134 | 17 |
| 08/12/04 | 09/02/04 | 5.2% | 15 | 161 | 12 |
| 01/24/05 | 03/04/05 | 5.0% | 28 | 427 | 16 |
| 04/20/05 | 05/19/05 | 4.7% | 21 | 111 | 27 |
| 10/13/05 | 11/10/05 | 4.6% | 20 | 139 | 131 |
| Average | 5.0% | 18 | 267 | 18 | |
I'm not sure exactly what to make of this because according to sentimentrader.com, this has never happened before. It seems like a negative sign and some may blame it on the action of bonds, but even when bonds did poorly during rallies in the other instances of the examples above, the market still did well internally. This unusually high number of new lows in this strong of a market is unprecedented.
We have another great item for sale in The Gallery. Please check it out.
That's all for today. Currently 100% G fund. Still waiting for a better buying opportunity before getting back in the stock funds. Thanks for reading.
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