DEADShort term sentimentsDEAD

vin · Posted: Thu Jul 06, 2006 8:35 pm Post subject: DEADShort term sentimentsDEAD

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.

HenryTo · Posted: Wed Feb 06, 2008 11:16 am Post subject:

Definitely - in general, someone purchasing stuff via a gift card is less proned to wait for mark-downs before buying. Just simply human psychology in operation.

rffrydr · Posted: Wed Feb 06, 2008 11:13 am Post subject:

...yes, that would be the surprise. --All those gift cards redeemed at retail will make up for a lot of lost sales at negative margins. And supposed to be the top 20% of wage earners accounting 60% of sales, there are advantages to a two-tiered democracy.
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Wed Feb 06, 2008 10:56 am Post subject:

I don't mean to be so repetitious, but don't forget the effect of gift card redemptions - the ones that were given during Christmas but were never booked as sales.

rffrydr · Posted: Wed Feb 06, 2008 10:44 am Post subject:

Wednesday before options expiration in oversold market is good buy a la "Weird Wollie Wednesday's." Probably get our real test next week.

Retail comes tomorrow with expected worst Jan. ever--so the bar is low. I didn't see a whole lot of discounting in jan. I'm guessing there's a surprise in store.
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Today is the Tomorrow you worried about Yesterday!

reidbrownfield · Senior Poster Joined: 13 Jun 2005 Posts: 105

This is the retest of the lows that I was looking for. The exact bottom will not be visable until it is over. This is close enough for me. I went long at the close yesterday.

Reid

HenryTo · Posted: Wed Feb 06, 2008 1:36 am Post subject:

Also, the 20-day MA of the ISE Sentiment Index hit 97.2 today, the most oversold level since October 28, 2002. At the bottom on October 9, 2002, the reading actually closed at 100.2.

Of course, we can always go lower - but unless both Japan and the Euro Zone enters a recession, I continue to believe that a DJIA print of 11,700 will hold on a closing basis.

diesel · Posted: Wed Feb 06, 2008 12:27 am Post subject:

A 10:1 down volume day on the NYSE and an ARMs index reading of 3 indicates we are close to a bottom here to my eye.

rffrydr · Posted: Tue Feb 05, 2008 10:01 pm Post subject:

Brother Frank won't commit. That's bullish:

"Rotation, Rotation, Rotation"

http://financialsense.com/Market/barbera/2008/0205.html
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Tue Feb 05, 2008 8:14 pm Post subject:

Thought I might have caught it on the 38% retrace...but flopped over and closed on lows. Only 16 closed higher. Can't be good.

Hope the airlines' consolidation game didn't throw us on the transports.

ISM: There were three industries reporting growth and 14 noting contraction. The labor market is also very weak according to the indices. The January drop may unprecedented.
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Today is the Tomorrow you worried about Yesterday!

lmrhoades · Senior Poster Joined: 17 Jan 2008 Posts: 112

Any comments on today's plunge???
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LMR

rffrydr · Posted: Tue Feb 05, 2008 11:08 am Post subject:

Still long outright. But with the VIX alive and well I prefer selling puts to outright longs. Got 40SPpts on the 1270 spike last time. Will look to do it again ATM 12335 basis cash Dow this time.

I have alot of trouble seeing SP over 1450 or $BKX over 100. I'm sure it'll be much clearer when they get there Shocked

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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Tue Feb 05, 2008 9:42 am Post subject:

This continues to be supportive for the markets, at least in the short-run:

http://tickersense.typepad.com/ticker_sense/2008/02/february-4th-bl.html

HenryTo · Posted: Tue Feb 05, 2008 9:08 am Post subject:

Let's face it - the latest ISM readings are a shocker. First quarter GDP growth will most probably be negative - but again, as I mentioned in last weekend's commentary, I believe the U.S. stock market had already discounted that at the bottom (DJIA 11,750 and S&P 1,250) a couple of weeks ago.

The good news is that oil prices are finally coming down in response to the ISM report.

diesel · Posted: Tue Feb 05, 2008 12:27 am Post subject:

Article about the recent outperformance of the DJIA relative to other world markets.

http://www.bloomberg.com/apps/news?pid=20601213&sid=ai8CisI2.eDg&refer=home

rffrydr · Posted: Mon Feb 04, 2008 2:11 pm Post subject:

Follow the bouncing monolines. Today, it is said that no private equity will take part. Moody's and SP (the ones that count) have effectively given a reprieve tothe end of the month.

The path is clear. The solution should not lag.
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Today is the Tomorrow you worried about Yesterday!