Market Monitor: Bearish.
- The overriding theme in this market for sometime has been the credit crunch. The bailout package may help alleviate that concern for sometime.
- All the major magazines in recent weeks have been very bearish. Which is a bullish sign.
- The number of 300 plus days in Market Monitor are up significantly in last few weeks indicating high volatility.
- The earnings season will start in earnest in few weeks time and that will become market focus.
- Current market conditions are not ideal for swing trading. This is currently day trading market.
Shorts were at receiving end after the 1929 crash and public sentiment was against short sellers for years. Similarly in market across the globe from time to time short selling becomes the favorite whipping tool of regulators and politicians. At emotional level to common man it is such a simple story to sell. Shorts brought down the market or shorts lead to collapse of this company. Shorts are evil, unpatriotic, anti capitalist and so on s a easy message to sell to the public.
Market history is full of periods where the public cries out loud aided by politicians "hang the shorts".
- Market was overextendeed to downside.
- There was panic and fear
- Short selling has been banned in UK and in USA (partially)
- The full might of the govt and regulator wanted the market slide to reverse
There was some attempt at bounce at around 2.30 and at one time it looked like again we will have same problem, no fear and dip buyers just buying any weakness. But in the last 30-40 minutes they got pounded and we ended at low. Which is the kind of action which is encouraging. You want more selling, more panic and absence of dip buying.
In spite of the selling in last 3 days, the indicators I monitor are not really in extreme territory. The Worden T2108 is at 15. The primary indicators on Market Monitor have not yet reached extreme territory. So this action is good but more of this kind of action would set us up for a tradable 2-3 month bounce.
AMGN,Amgen Inc (Google Yahoo Earnings Chart)
CB,Chubb Corp (Google Yahoo Earnings Chart)
LGND,Ligand Pharmaceuticals B (Google Yahoo Earnings Chart)
MET,Metlife Inc (Google Yahoo Earnings Chart)
MRH,Montpelier Re (Google Yahoo Earnings Chart)
SAP,Sap Ag Ads (Google Yahoo Earnings Chart)
TRV,The Travelers Companies` Inc. (Google Yahoo Earnings Chart)
WRB,W.R. Berkley Corporation (Google Yahoo Earnings Chart)
Irrespective of the external noise, if you look at Market Monitor indicators. While the primary indicators are bearish , the secondary indicators are bullish and in the next 1-2 week time frame the market has bullish bias.
In an ideal world we would have liked the market to panic more, the MM indicators to have reached extreme and then the market reverse. That would have been enormously positive for a healthy 3-4 month rally. But we have to deal with what we got.
Generally post Fed for a day or two there is lot of volatility and then clear trend emerges. As of now clearly the financial are the focus and bulk of action is concentrated in all kinds of banks and insurers. Those are the sectors which saw broad based buying yesterday.
It was very systematic, slow motion sell off. It never looked panicky. In panicky sell off you see waves and waves of selling. So there is blood , but not enough.
Lot of talk about 9/11 sell off comparison. In that case after 4-5 days of selling, there was a spectacular bounce lasting months. So if selling persists for another 3-4 days it will be very bullish. I am beginning to turn a bit bullish and looking to deploy cash if there is more blood.
Tomorrow is Fed meeting day so expect lot of volatility.
Let there be more panic, more fear.We have not really seen blood on street for many days now. You want series of days of panicky selling. You want bears and perma bears dancing on the street in glee. You want hopelessness. That is good for subsequent rebound.
Currently market is in bearish phase but not at extreme readings.
T2108- % of Stock above 40 day PMA: Worden software has this indicator. It is currently at 36.95. That kind of readings do not indicate panic. Readings below 20 are very bullish. Panic means readings below 10 on this.
Market Monitor: My proprietary market timing system has been in bearish territory, but none of the readings are in extreme territory , which invariably lead to reflex bounce. We will see by end of day how much damage the panicky selling does to the readings.
So let there be more panic.