DEADShort term sentimentsDEAD

[vin]

New here – mostly swing trading. I’ve been searching for a serious site and believe I have found it here. Mr. To’s commentaries are excellent. Let’s cut to it - I for one am spooked short term (1-3 weeks). Here are my reasons:
First, the current rally just doesn’t seem to have teeth. The move up on June 29 seemed exaggerated. It was just a big ‘Hurrah, the Fed did what we expected.’ Many read a future pause into Bernanke’s statement but who knows? It’s almost as if the market ‘willed’ a rally.
Second, after this delayed follow through day the major indexes responded with a pullback on increased volume (modest in percentage loss).
Third, two days prior (June 27th) all three indices had what I call a ‘heave day.’ They climbed over the previous day’s high only to close lower than the previous day’s low – all on increased volume.
Fourth, there was no doubt some end of the quarter window dressing and short covering.
What has happened since? Some call it consolidation; I call it distribution and selling into bounces. The accumulation volume has been anemic. Although the holiday week clouds things the leading events remain.
Lastly, the most important thing is the gut. Something makes me feel very uneasy (see below). Maybe it was the synthesis of what I mentioned above; maybe I am worried about locking in gains on this recent move up. Nevertheless, I liquidated everything except LEN as I don’t think homebuilders can get beat up much more (gee, wonder where I got that idea?).
North Korea lobbing missiles into the sea doesn’t help. I think there will be one more shakeout before we test old highs again. I don’t know if we’ll sink to (or below) the mid-June lows, but it could be painful. Predictions are pretty much worthless until events transpire. I’m only building an arguable case. The market doesn’t care or need reasons to steamroll every naysayer out there. Let the tape decide.

Side note: I was reading my Bible before the market opened and came across these verses:

“With her enticing speech she caused him to yield, with her flattering lips she seduced him. Immediately he went after her, as an ox goes to the slaughter, or as a fool to the correction of the stocks…” Proverbs 7:21-22

I don’t claim to have divine intervention on my side, and starting my day with this verse might have been what spooked me. Take it for what it’s worth, but the wording in this verse is uncanny in its application to bulls running up a blind (r)alley. The Bible remains the best book on investing ever written (not to mention the invaluable spiritual content). If you don’t have one, get one.

[rffrydr]

From kirkreport today:

[HenryTo]

The Investors Intelligence Bulls-Bears Difference came in at 8%. This should decline even lower next week, given the two-week time lag.

[HenryTo]

Hi lmrhoades,

Keep your eyes on the ball, but don't over-interpret. The 50 bps point cut is baked in no matter what happens between today and tomorrow afternoon. The next meeting isn't until March 18th and it will be too late by then for any further Fed easing to be effective (and one emergency cut in an easing cycle is already enough).

Best of luck,

Henry

[rffrydr]

Here's the answer:

http://futuresource.quote.com/quotes/quotes.jsp?s=QED
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

You sure this makes ALL the difference?

http://biz.yahoo.com/ap/080129/durable_goods.html

BA's stock coming off nearly 20% discount to 200dma. So, that's nice. The Fed is addressing the lock-up in the financial system. So the news would have to come from there.

If we overstate the role of financials in the economy could it also be that there is another financial system? Aside from the "shadow-finance" what can we learn from China?
_________________
Today is the Tomorrow you worried about Yesterday!

[lmrhoades]

Henry...
Due to the sharp reading today with durables will this change your stance of the likely .50 rate cut tomorrow?
_________________
LMR

[HenryTo]

This was your cue to go long this morning. Notice the latest plunge in the green line:

http://tickersense.typepad.com/ticker_sense/2008/01/january-28th-bl.html

[rffrydr]

The retest was two weeks back, at 1380 on higher RSI; then the downthrust: you could read it in classical terms as 5point reversal after a downthrust (which got carried away by the holiday/rogue effect). You could have read the other "turning points" classically as well--which is the problem with TA. It does provide you with a structure--tailor-made to level of optimism. It certainly turned differently than our others this last couple of years. So now we have a change of character.

The heavy volume and extreme moves and accompanying popular pessimism have given you a strong buying opportunity--if you are a buyer.
_________________
Today is the Tomorrow you worried about Yesterday!

[nodoodahs]

There is no rule that says a spike in the VIX is absolutely necessary for a bottom. There is no rule that says every single bottom gets a retest. There have been bottoms with, and without, both, throughout history.

Conjecture:

If the bottom were set by a single player, i.e., the unwinding of a $70 billion dollar position by SoGen, it would make sense that (1) it wouldn't be retested, and (2) since they didn't use any options strategy in their unwinding, there was no VIX spike. Therefore the sentiment of the remaining participants should lead to a rise.

If the tone of the market in the last few months has been set by recession expectations, which I think it has, then the outflow of economic data and the outcome of earnings season will be a catalyst, one way or the other.
_________________
I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[sjwohio]

Even though there are some positive divergences, what will bring buying back in with volume at this point? I am a novice but the Vix has not been that high and seems to want to go higher. If consensus is that a retest will hold, why can't we break to new lows and then really get a washout? Or can we bottom due to time and slowly washing out the sellers? Just trying to learn. Thanks.
_________________
SJW

[lewie2004]

Now some people are suggesting that the dow needs to retest its lows before surging forward. Does this mean closing lows or intraday lows. I thought we retested the lows on tuesday during wednesday. what do we need to retest now as far a TA?

[rffrydr]

As Wolanchuk is fond of saying, "three days fear for the price of one."
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

ATT triggered this recession convulusion and it will pull us out of it:

[lmrhoades]

Henry...
Nice call thus far on the retail names, awesome...how long you suppose this can last before we stall
_________________
LMR

[gregf]