11 day rally continues | stockbee

10/19/2011

11 day rally continues


Situational awareness

Situational awareness is:
The perception of the elements in the environment within a volume of time and space,
The comprehension of their meaning and
The projection of their status in the near future.
It is a widely used aviation term. Pilots are trained in SA to avoid accidents.
Same way on day to day basis you need SA to be in tune with market moves. You should understand the context of any move.
Currently we have had a roaring 11 day bounce after MM reached extreme readings. Often such rallies herald start of new bull moves lasting months.


As of now however rally has some unique characters that make it not a typical bull market rally. Most stocks are bouncing from bottom. There are very few classic leadership kind stocks and setup. Which has many people believing it is a bear market rally.
On immediate basis we are extremely overbought and most stocks have V shaped bounces or rallies. A 2 to 3 weeks sideways moves or pullback on these stocks will create actionable swing setups.
One of the reason for worry is low number of EP showing up currently. It is too low a number for typical start of bull move.
The number of stocks up 25% in a month is pretty low at this stage compared to typical bottoms.
Implication you have to be cautiously bullish and play for smaller moves and keep losses small.

2 comments:

Unknown said...

You mention "EP's" are too low in count, or lower, than what you would expect in a rally. What number would you expect to see, or have you seen in the past? I agree that the number of EP's seems low (only had 6 the other day, 15 today), but I don't have a long history with that scan. Thanks.

Pradeep Bonde said...

In most cases upwards of 40 plus and some days 70 plus.