Interesting Development

Yesterday sellers came back from the holiday break and hit the market hard. Unfortunately, all this did was mess up the charts so as to keep everyone guessing what to expect next. It is our gut feeling that this market has gone down too far to provide good shorting opportunities that are worth more than just a quick day trade. We are not convinced that the downtrend is resuming here and we have...

Overbought?

Stocks are overbought here after 5 days in a row without a pullback. Traders are also probably well aware that volume shrank on the rise. This is absolutely a classic short set up. The question is, will it work? Our scans are showing us quite a large number of stocks behaving well here. A big, high volume down day would probably eliminate this finding, but it is what it is at this moment. The m...

How To Recognize When A Stock Market Bottom Is In Place

The stock market fell 50% from its high this year but if investors were paying attention, they could have avoided most, if not all of the loss. The big questions that remain, however, is where is the bottom and when will it be safe to buy again? Click here in order to learn to recognize a bottom and avoid buying too early the way Warren Buffet did when he lost 50%. Any thoughts? We would apprec...

Is This Short Squeeze Any Different?

Over the past two trading days we have experienced a short squeeze. Late Friday the market rallied on the news of Obama's Treasury Secretary nominee and then yesterday bulls had the impetus of a Citigroup bailout. But is it enough? So far we see no evidence that this short squeeze is any different than the short lived squeezes we have witnessed over the past couple of months. Volume shrank on M...

Very Scary S&P 500 Chart

While the SPY has yet to reach its 2002 lows of $71.20, the S&P 500 has now breached those lows. We try not to make too much of technical analysis when applied to such large time frames since it seems rather dubious that such long term charts expanded to multi year monthly levels can accurately portray institutional positioning for future events. This is because the future is dynamic and in...

SPY $85 is Key

On Thursday buyers saved the day and gave bulls hope that a bottom was put in place. Typically a high volume save at support does indeed indicate that buyers are taking back control. The problem is, on Friday prices once again eroded. Sellers may have been on strike, but buyers did not step into the void and now we have a market that is just falling on its own weight. We will get the countertre...

The Potential for a Large Stock Market Rally

This week economist John Mauldin writes: The Potential for a Large Stock Market Rally Everyone knows that there are large amounts of hedge fund redemptions being processed. Some blame the current vicious sell-off on forced hedge fund sales as they have to meet these redemptions at the end of the quarter. This brings up an interesting possibility. My guess is that the large bulk of that money is...

Slip Slidn’ Away

What is significant about the market here is the fact that more than 300 heavily traded stocks have already closed below October lows. If the current trading range were a bottoming base we would expect to see market leaders breaking out to the upside, not the downside. In fact, the only stocks seeing significant buying interest are the recession stocks like NDN. Meanwhile, major retailers are t...

Too Many Still Looking For Upside

Sentiment continues to be unfavorable for the bulls. Even as the market struggled yesterday more became convinced of upside potential. This overly bullish sentiment does not bode well for SPY support, which stands at $90. A break below that level will very likely lead to a retest of last month's lows and could potentially lead to a breakdown and the possibility of a true capitulation event.

Market Sentiment

We had an up day on decreased volume today. This doesn't give a lot of cause for confidence. Even moreso heightened bullishness readings give one a reason for pause as the market continues to struggle to mount a rally: Sentiment readings from Ticker Sense. Sentiment Trader has investment sentiment back at neutral. This is where it has been during each market downturn over the past few months.