Thursday, September 16, 2010

9/16 11:15

Buying bond here is against the EWI call for lower prices.  However, with stocks ready to turn lower and the bonds' own I1 gauge turning up I think it might be an intelligent short-term buy.  Here is the 73-day M/A coming in at today's lows.
In the stock market I1 continues to turn the Titanic around.  There is a lot of mass and momentum there.  With this kind of multi-day congestion minor new highs are to be allowed for because it is an environment where the potential for "sucker plays" exists.  I won't sell my ETFs until DJI exceeds Tuesday's high by 27 points.  10,588 + 17 is 10,603.  The other point will be SPX 1129.


  1. Can you comment on how such a rally can be done on so low a volume? Titanic was voluminous. Not so this market.

    Do the bears just sit out a rally and cover? It seems volume only picks up at turning points.

  2. Steve

    Looks like we may have just broke through the upward trend to the down side.

    Jack C

  3. The world stock markets have had a good run in September prior to Sunday evening. Mass x momentum = energy. You are correct in that volume has been declining on this rally. I'll post a volume chart for SPX with a trendline. Technical deterioration is evident in many series. The conclusion is that buying power is waning. However, weak technicals can exist longer than capital can hold out. It still requires a game-changing shift in market psychology to translate weak technicals into price decline. The psychology is the real mass because it tends to become ingrained on different time dimensions. The current short-term psychology has been bullish, but is increasingly less confident. Less willing to buy, more willing to wait-and-see. Fund managers act alike, look at similar metrics, discover and mimic each other's portfolios during uncertain times. So, in July they had record low cash, 3.4%. On this rally they increased their stock allocations. They don't have any more ammunition.