1) Fear is on the rise - The traffic on my weblog has been a really skillful indicator of trader worry over the past times 2 years; we're seeing an pinnacle consistent with levels seen during recent intermediate-term bottoming processes. Equity set mass hitting its highest grade since mid-July, every bit did the equity put/call ratio. The latter is at levels that stimulate got been seen during recent intermediate-term bottoms.
2) Influenza A virus subtype H5N1 lot of stocks are non making novel lows - We made fresh acquit marketplace cost lows inwards the NYSE Composite Index in addition to the S&P 500 Index on Monday. In spite of that, solely 210 mutual stocks made fresh 52-week lows inwards the NYSE Composite universe, versus close 450 inwards July in addition to over 700 inwards January. Of the 500 S&P large cap stocks, solely 43 made novel annual lows. And of the 400 midcaps in addition to 600 modest caps inwards the S&P indexes, solely 31 in addition to xx respectively made fresh 52-week lows on Monday. All of these stand upwards for far fewer novel lows than registered inwards July.
3) Influenza A virus subtype H5N1 lot of fiscal stocks are non making novel lows - Yes, the Banking Index ($BKX) was really weak today. But it unopen at close 65, good off its July lows of 46.52. We likewise saw a harrowing reject with the S&P fiscal stocks (XLF), closing at 19.09, downwardly nearly 10% on the day. Still, nosotros sit down good inwards a higher position July's depression of 16.77. Many fiscal issues are beingness taken out in addition to shot, simply many may stimulate got already set inwards their bottoms.
4) The housing stocks are non making novel lows - The homebuilder's index ($HGX) was downwardly nearly 5-1/2% on Monday, closing at 128.95. While uncomfortable, that is really good inwards a higher position July's depression of 93.75. Could it last that this sector has seen its lows in addition to is anticipating a rebound ahead?
5) We're oversold - My Cumulative Demand/Supply Index mensurate roughshod below -27 on Monday, moving it into oversold territory. When the Cumulative DSI has fallen below -25 since July, 2003, the side past times side thirty days inwards the S&P 500 Index (SPY) stimulate got averaged a gain of 2.42%, with 96 occasions upwards in addition to solely nineteen down. Across all other marketplace occasions, the average 30-day gain has been .49% (704 up, 462 down). This fits good with the average 30-day gains next occasions when we've had to a greater extent than than 3000 stocks making fresh 20-day lows.
5) I'm non buying yet - Influenza A virus subtype H5N1 valuable slice of advice from my days living downwardly southward was to "dance with the 1 that brung you." I've learned to non endeavour to anticipate bottoms, simply rather position where 1 powerfulness last inwards position every bit speedily every bit possible. As long every bit traders in addition to investors are hitting bids in addition to driving the Cumulative NYSE TICK lower--and every bit long every bit we're non seeing positive coin flows into stocks--I'm keeping pulverization dry. Those indicators stimulate got treated me good over the years, in addition to thence I'll proceed dancing with them. And I produce recollect looking for lows inwards October, 1987 when a unmarried day's timing made a 20% functioning difference: If the tidings is bad enough, nosotros may launder out yet in addition to stimulate got the bulk of stocks in addition to sectors to novel lows. So far, however, I'm comfortable trading the downside in addition to looking for opportunities to invest inwards the upside.
6) Afterthoughts - Had a squeamish telephone conversation with Jon Markman terminal night; he referenced Paul Desmond of Lowry's Reports inwards observing that selling does non brand a marketplace bottom; buying does. Great point. We solely become a bottom when large marketplace participants perceive cost to stand upwards for value. Not in that location yet. Here's Markman's latest stimulate got on the market...Thanks to Trader Radio for having me on the air yesterday AM; here's the link to the show.
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