Dow was down by 23 points to 8299. Market action in past few days shows continuous deterioration in fundamentals, i suggest to sell 75% of your holding, I will start selling my holding in couple of days.
Here is the reason why i belive so....
We saw 90% down-days on June 15 and June 22. Normally, following a 90% down-day there will be a rally lasting 2 to 7 days. But we've seen nothing impressive following the two June 90% down-days. The latest 90% down-day which occurred on June 22 saw a labored rise in the internals of the market, even though yesterday the Dow actually closed lower as the market lifted feebly higher.
Every day the market does "something." The public always wants to know WHY the market did this or that. Newspapers survive by serving and interesting their readers -- for this reason newspapers feel pressured to supply the "reason" for each day's market move. Of course, this is utter nonsense. We almost never know the real reason for the market's daily movements, and if we try to zero in on the reason, the reason we choose is invariably wrong.
Therefore it is best to forget the "why" of any market movement. For instance, the market may decline on rotten housing news, but the decline had nothing to do with housing news, actually the reason for the decline was a break in the bonds as interest rates pushed higher.
In the end, it is best to treat the market and the news of the day as two totally separate items. The only study of the market that is worth anything is the study of the action of the market itself. The best study of the news is via Bloomberg or Barron's or the Financial Times. But it's always best to keep the two studies totally separate. Or as Keynes put it, "The market can remain irrational longer than you can stay solvent." Of course, an "irrational market" is a market that you don't understand.
Thursday, June 25, 2009
Monday, June 22, 2009
Market bouncing up and down like a cat on a hot tin roof
The Dow and the S&P 500 moved higher today breaking a three day losing steak. The Dow ended higher by .70% and the S&P 500 plus .84%. The modest gains can be attributed to a better than expected Index of Leading Economic report showing the strongest gains since 2004 and unemployment claims falling unexpectedly.
The chart below shows the percentage of NYSE stocks that are holding above their 50-day MA. Although the major stock averages are trading near their bear market rally highs, the percentage of stocks holding above their 50-day MA is declining. As of yesterday, the percentage was only 67.7%. This tells us that the main body of stocks are lagging behind the leading stock averages, not a good indication.
This confused market is bouncing up one day and down the next -- like the cat on a hot tin roof.August gold was up 1.60 and continues to creep higher. Creeping slowly higher is bull market action. Sharp and violent corrections are also typical of bull markets.
The chart below shows the percentage of NYSE stocks that are holding above their 50-day MA. Although the major stock averages are trading near their bear market rally highs, the percentage of stocks holding above their 50-day MA is declining. As of yesterday, the percentage was only 67.7%. This tells us that the main body of stocks are lagging behind the leading stock averages, not a good indication.
This confused market is bouncing up one day and down the next -- like the cat on a hot tin roof.August gold was up 1.60 and continues to creep higher. Creeping slowly higher is bull market action. Sharp and violent corrections are also typical of bull markets.
Subscribe to:
Posts (Atom)
