Hello was anyone at a trading desk???
In a nut shell it was over in the first hour. There were no buyers or sellers. Friday marked the second session in the last six that the entire day’s trading range was defined within the opening hour; this is usually a two or three time per year occurrence. This is a characteristic of a topping process; this rarely happens except at market tops.
The sellers have been hammered since late August. This market has ignored all the technicals and just gone higher. Hedge funds are chasing performance as they are behind by 500 basis points. Mutual Funds are all in at 3% cash level according to Prechter in CNBC interview (Sept 29th) with Maria B. So where is the money going to come from to push this even higher (Leverage/Margin). I don't know but I have been hearing this for a while now and it just keeps going higher. Every time I have shorted my stops have been triggered within a day or so.
"Tis' the season to be Bullish"
There are a lot of things pointing to a top but the market participants have simply ignored them. This will end badly but when?? I have no idea. I have been wrong so much I have lost all confidence in the indicators I have followed and myself.
Signs of a top: Resistance levels, This market is up against strong long-term resistance levels, Dow off 100 points and S&P 40 points from the April high. The breadth in the market is deteriorating somewhat and the volume on up days vs. down days is not very strong.
The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 200) has reached 88. This is the highest RSI since the April highs when the RSI reached as high as 95, but pullbacks often occur as this RSI reaches 80. 73.6% of stocks in the S&P are above their 20 day moving average, signifying extreme bullishness. AAII Investor Sentiment is showing 49% bull vs. only 25% bears (this is usually a bearish indicator for markets). Weekly Stochastics are also showing overbought conditions, though not as high as April as yet.
I am staying short for now with a quick cover trigger finger, long-term I understand the S&P is cheap in terms of forward earnings and corporations are putting up fabulous results beating estimates, emerging markets are doing well those markets are up big but from I have read their leading economic indicators are declining especially in China and India. They are all benefiting from a weak dollar. You saw what happened last week when the dollar rose, EEM dropped 3.5% in a day. The Dollar is bottoming at least in the short-term, I think this keeps a cap on where the markets, metals go for the next two months or so. Long-term I think we do see a weaker dollar because the fed has to keep borrowing (Peter to pay Paul) at some point we need to be fiscally responsible before we turn into Greece.
No comments:
Post a Comment