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>What has happened is "real",...the question is ....is it sustainable,..
>will the Dow and S&P500 continue higher from here?
>From memory:
The good stuff:
a/ Up/Down volume, Advancing/Declining issues, Value @ bid - Value @ ask
(aka Money Flow) all overwhelmingly positive.
b/ Exact same configuration on major bottom days of Oct 97 and Oct 98,
though the capitulation characteristics were different.
c/ Wilshire 5k hit a new high.
The bad stuff:
a/ MSFT flat on the day, and big money pulled out. Largest cap stock sitting
flat on a day like this = flag.
b/ NAZ high flyer components' selling ostensibly weak-hand margin related,
not fund driven. So we don't know if they're cleaned out totally.
c/ Seasonality played its cards again, with energies, airlines and banks
again going for the jugular.
As usual, the ducks never line up "just so".
>But,...psychology is overly complacent,...
If traditional ratios are the reference point,
a/ put-call: they seem to have better predictive value at bottoms than at
tops (ie when they get overwhelmingly bearish is more useful than when they
are overwhelmingly bullish).
b/ cot: small traders reversed their bullish posture into large scale
bearish basis 3/13, and the small specs were at odds with the large funds,
who had started getting bullish. Commercials ate small fries for lunch past
2 days.
c/ Put open interest market cap was some $26 billion > call open interest
market cap going into yesterday for SPX. Put sellers cleaned up.
d/ In spite of the selloff going into yesterday AM, the ATM put strikes in
the OEX kept INCREASING their OI. This was a major head scratch. Somebody
smart, and big, was selling all those puts in spite of the selling pressure.
They cleaned up good.
In sum, it looks to me like some wealth distribution happened - as usually
happens when the small "we" lean heavily one way.
>Steve Shobin (Lehman Bros) constructive as long as NASDAQ retained
>leadership role,..in particular Cisco and Russell 200 as bellwethers.
>Clearly that has not happened and key uptrend support has been broken
>in the "New Economy" stocks.
suggestion:
a/ One day does not a trend make. Wilshire 5K did make a new all time high
today so one could pick that index to derive the Steve implied conclusion.
b/ CSCO, NDX etc put in Key Reversal bars, by the textbook at the 50 ema. I
would give it time since csco intraday specifically looks like an attempt to
pin the strike.
>We had a bounce something like this back in April of 1999,...and
>cyclicals jumped 4% in two days,..etc. very similar to now.
Yes.
>little follow through after the market had shot it's load. I think
>we are seeing that again here,..and fully expect trading range (as opposed
>to trending) activity for the S&P500.
Valid concerns. Don't know what the future holds.
Gitanshu
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