:: actio-et-reactio ::
amg's market charts and blather
amg's Charts
Looks of a counter rally within the largely still bearish forks.
Even so, what a move. Bullish sentiment SOARED today, if TV cheerleaders and pundits are any indication. Plenty of laughing too about "investors" not opening 401K statements, some of them on the advice of their financial advisors. Mary Farrell actually told Lou Dobbs "Happy days are here again". And mutual funds are 95% invested, ie have only 5% cash on hand for new purchases, no doubt confident that "new inflows" will serve to fuel their performance against the S&P.
Does the market really reward the masses? I remain skeptical about the lasting quality of today's "powerful rally" and its ability to lift all boats. Take a look at the iShares sectors components, the sharpness of the reversals across the board, and the fact that, for the most part, despite the very dramatic gains, the net move is largely contained within the still dominant downtrend. Perhaps in a few months it will be within a dominant side-trend, at which point "bottoming" will be a more viable concept.
The tragedy of the recent bout of market losses that only now, when by far the biggest damage has been perpetrated, are people starting to realize that those "paper losses", the ones that if they don't sell they don't "really" have, are in fact, REAL LOSSES, and only become more so as the market doesn't rebound. I just heard a lady say she has half-a-million bucks, fully "invested", but that if she sells, she'll have to take the loss. This lady doesn't see that she no longer has half-a-million bucks, her "paper loss" is real.
For many, these losses are at this point "only" financial losses. Unfortunately, there are silent losses at work, those that at the point of realization of what it will take to recover those loss will indeed hobble confidence and wear down the spirit. One needs to take a completely different view of the situation, of one's own complicity, and "what to do next", and to do it differently.
No amount of scapegoating, partisan-blame assigning, and "rational thought" will change that.
Not to say that those with truly long time horizons might consider putting money into the market at some point soon. One should at least continue to save money, even if at paltry money market rates. Ironic, isn't it, that the low interest rate environment, which is meant to stimulate one kind of investment such as for industrial capital expenditures, has flattened individuals on fixed or near fixed incomes. Rarely have stocks AND bonds retreated in tandem, but that very situation has robbed even the more cautious of their safety net. It is one thing for economists to encourage people to invest, but to outright encourage folks to catch falling knives each day in anticipation of an imminent turnaround is worse than folly, it is criminal.
And of criminals and folly, alas, we now know there is a more than ample store.
To put the following table in perspective, the Bubble Years returned an average 20% per year. The years 1990 to 1999 returned 12% on average. A balanced expectation going forward is more like 5% to 8%. PER YEAR. Reality hurts.
13/14 Jul: Sat/Sun: Added minor forks to the NDX suggesting a rebound. Also noted a small upturn in the Accumulation/Distribution for the NDX, which while breaking a small steep downtrend line, is still below the longer term Acc/Dist downtrend line.
Added Monthly and weekly SML charts, both of which are confirming the grave weakness in this index. If it doesn't rally soon, it may in fact find fresh lows. At best, it may stay in conjestion until the Small Cap Season at the end of the year.
11Jul Thursday: The fresh lows won out and the SPX fork, after so many months was finally breached. Interestingly, the NDX has *relative* strength (as the SML continues to sell off). How long that will last is the question, particularly since the lower NDX fork has not yet been reached.
10Jul Wednesday: Goodness, the SPX lower fork finally got a touch! Without giving the rest of the TA much thought, perhaps a rebound *is* in the offing. Notice too how the small caps have continued to be weak, so maybe, just maybe, some of that cash is being put to work in the SPX big caps... I'm not wildly enthusiastic at this point as fresh lows can also signal the possibility of yet lower lows.
Interestingly, the The NDX has been strongish relative to the SPX...but this may not last. Today (Wednesday), MSFT did quite a bit of the work holding things from *really* moving down with conviction. One thought keeps recurring to me: tops are made in violence, bottoms are made in quiet. This sure feels more like topping action than not.
On the SPX, got the test, retest, fresh lows, and on a very strong down candle, which suggests that fork, which has been in place since MARCH, may itself be broken. Only the blue fork suggests a rebound, perhaps only to ~950 as a first target.
7Jul Sunday: While the NDX hit prior lows quite a bit early, the SPX (and INDU) had until recently, stayed aloof from that nasty action. The recent move to 944, however, is not likely to be a touch and go, but rather a test and retest, and IMO, a prelude to a fresh low, as indicated by the bold Andrews fork.
The last rally on the SML was extremely wimpy and further gains are increasingly less likely. Tuesday the index finally broke its Andrews support, opening the road to simple support lower below as the index corrects in tandem with the rest of the market.
Chart action not suggesting "big" action up or down.
The major trend in both the NDX and SPX continues down with price having lightly touched the 8d MA and closing on the lows, which suggests a bit more down this week. Having said that, apart from the ever-present "exogenous event", there are signs of bottoming, ie, building a base as we drift sideways, albeit one still biased towards more down than up.
The SML, on the other hand, looks a bit stronger as it moved just above the 8d MA with a positive close. Remember, however, that the Russell 2000 experience "rebalancing" last week which created more action than usual.
Amazing, the first half of the year is now behind us.
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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