We had a breakout on Friday for all indices above the trading range. what makes you think we have seen the top today (apart from "all the buyers are already in", "bullish sentiment at a new high", etc? is it possible we can spend a lot of time at these levels before we move higher? Given the kind of news we are getting on economy lately, its hard to break this market. I moved most of my money to the sidelines until i see a direction. appreciate your thoughts on this.
Well yes Friday there was a break out, but check out daily RSI, you should spot a divergence. High bullish sentiment needs to be be into perspective; it's higher now than it was in October 2007 when the market peaked. In terms of news, I don't watch it, I would rather look at a plot of the Baltic Dry Index or shipping/frail rates, which again, show a divergence building for over a month (dropping while S&P is rising). So top today or not, I think we are in that zone a top is a high probability event.
"Measure a thousand times and cut only once." - Turkish proverb
I track 12 technical indicators of various types (price, breadth, momentum, etc. trying not to overlap) and have a -24 (bearish) to +24 (bullish) scale.
We are now at -19, with only the short-term not maxed out.
Does the good news never end? From a logical standpoint, most news will be good news during a recovery, and having heard the worst news in decades late last year, good news is only to be expected now, so most good news is not really manipulation by anyone; but, the President taking a break from his break to announce Bernanke's re-appointment - whoa! this is where I draw the line. What's the urgency - market on the verge of a breakdown?
uh...oh. Another scary (bearish) statement!! "on the verge of a breakdown" The more we exaggerate something will be really really bad, the less less and the least likelihood it might happen. Just my observation so far.
The endless run up of the market resembles Nasdaq in 2000 before the crash. People need to know that public money is being used by banks (Goldman Sachs first of all) to buy stocks, on behalf of Fed!
Lets give the market one more week..till the EOM. Right now the sentiment is (on CNBC) markets will pullback starting september 1st and into october which is making me nervous. Now I already hear it so much, even that might not happen. It would be a disaster for bears if even that pullback doesn't come.
I recall writing TA for a news service in 2000 and trying to set resistance levels in uncharted territory. Every day, I said, this is nuts!" yet up it went.
The market is clearly overvalued. No news flux, albeit good, can explain these abnormal levels. The economy is still in disastrous conditions. If you look at S&P weekly chart, I think that the technical damage we had in September and October (vertical drop of prices) impede further increase, simply, let me say...for an aesthetic point of view. It would be innatural, something never seen...
Antonio, Agreed. Lets step outside the box and see. If I went into a short position during that precipitous drop after lehman and am still holding it, and I see a market slowly re-capturing those levels, I would obviously would want to cover it...UNTIL I do a breakeven atleast. Though it could be argued the other way, whoever bought it at those levels would want to sell it, I dont see that happening. So, I (assume) first case holds true STILL. Eventually, we might see the balance when market goes back to pre-lehman levels. If at that point, economy deteriorates further, we could see a double dip. The unnatural phenomenon that you see now is just an unwinding of what happened last year. If you see weekly charts, you can see that price gaps from last september were so quickly covered in the last 6 weeks. We need to wait for those sellers who bought at these levels to sell. I honestly feels good if I am wrong and market breaks in the next couple of weeks.
12 comments:
Continuation flag, or corrective wave. Take your TA pick, but otherwise I think the top of the US markets were today.
William,
We had a breakout on Friday for all indices above the trading range. what makes you think we have seen the top today (apart from "all the buyers are already in", "bullish sentiment at a new high", etc? is it possible we can spend a lot of time at these levels before we move higher? Given the kind of news we are getting on economy lately, its hard to break this market. I moved most of my money to the sidelines until i see a direction. appreciate your thoughts on this.
With regard to breakouts - yes, they have worked for weeks.
With regard to this being the top - jury is out but a failed breakout is one recipe for a top.
With regard to sentiment - Every time I suggest that the market is fooling me it pulls just such a reversal. Check KBE bank ETF.
Ramu,
Well yes Friday there was a break out, but check out daily RSI, you should spot a divergence. High bullish sentiment needs to be be into perspective; it's higher now than it was in October 2007 when the market peaked. In terms of news, I don't watch it, I would rather look at a plot of the Baltic Dry Index or shipping/frail rates, which again, show a divergence building for over a month (dropping while S&P is rising). So top today or not, I think we are in that zone a top is a high probability event.
"Measure a thousand times and cut only once." - Turkish proverb
I track 12 technical indicators of various types (price, breadth, momentum, etc. trying not to overlap) and have a -24 (bearish) to +24 (bullish) scale.
We are now at -19, with only the short-term not maxed out.
Does the good news never end? From a logical standpoint, most news will be good news during a recovery, and having heard the worst news in decades late last year, good news is only to be expected now, so most good news is not really manipulation by anyone; but, the President taking a break from his break to announce Bernanke's re-appointment - whoa! this is where I draw the line. What's the urgency - market on the verge of a breakdown?
uh...oh. Another scary (bearish) statement!! "on the verge of a breakdown" The more we exaggerate something will be really really bad, the less less and the least likelihood it might happen. Just my observation so far.
The endless run up of the market resembles Nasdaq in 2000 before the crash. People need to know that public money is being used by banks (Goldman Sachs first of all) to buy stocks, on behalf of Fed!
Lets give the market one more week..till the EOM. Right now the sentiment is (on CNBC) markets will pullback starting september 1st and into october which is making me nervous. Now I already hear it so much, even that might not happen. It would be a disaster for bears if even that pullback doesn't come.
I recall writing TA for a news service in 2000 and trying to set resistance levels in uncharted territory. Every day, I said, this is nuts!" yet up it went.
Until it stopped.
The market is clearly overvalued. No news flux, albeit good, can explain these abnormal levels. The economy is still in disastrous conditions. If you look at S&P weekly chart, I think that the technical damage we had in September and October (vertical drop of prices) impede further increase, simply, let me say...for an aesthetic point of view. It would be innatural, something never seen...
Antonio, Agreed. Lets step outside the box and see. If I went into a short position during that precipitous drop after lehman and am still holding it, and I see a market slowly re-capturing those levels, I would obviously would want to cover it...UNTIL I do a breakeven atleast. Though it could be argued the other way, whoever bought it at those levels would want to sell it, I dont see that happening. So, I (assume) first case holds true STILL. Eventually, we might see the balance when market goes back to pre-lehman levels. If at that point, economy deteriorates further, we could see a double dip. The unnatural phenomenon that you see now is just an unwinding of what happened last year. If you see weekly charts, you can see that price gaps from last september were so quickly covered in the last 6 weeks. We need to wait for those sellers who bought at these levels to sell. I honestly feels good if I am wrong and market breaks in the next couple of weeks.
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