Sunday, February 22, 2009
the Wilshire bottomed at 7600, after five consecutive down days on expanding volume, the liklihood is that it continues the bleedout, but IMO, I dont think the patient has a lot of blood left in him.
When you click on the link above and scroll the bottom of the "MARKET SUMMARY", you will see the "BULLISH %" for various Sectors. Today, these numbers fit well below Minus TWO Standard Deviations on the Bell Curve, or below the BOLLINGER BANDS. That is enuf to tell you they are so far underwater, the buoyancy is UP. Whether this translates into a serious rally, remains to be seen.
A number of wags have tried to make a case that the SUMMATION INDEX [ $NASI ] has gotten as high as approximately a value of - 200, which are about the peak for the last two years. This is cited as "Evidence" that this market MUST decline at this point. Such MIGHT Be the Outcome but that IGNORES potential for Reversal or Trend Change, as the Peak in March of '03, was well over 700. I do not claim this will be a bull market, BUT I will not ignore the POSSIBLITY of a tend reversal. Another group of wags, points to the sister index on Momentum [$NAMO], and cite it for evidence for their point of view. Right now the NAMO is 15% higher than its Nov 25th bottom and many, many of the Bullish % Indexes are extremely oversold postures. THIS does not mean a rally is DEMANDED, but it is the start of what I like to call INCUMBENT CONDITIONS, which often give rise to Rallies.
IMO> ignoring the potential, letting the pessism paralyze you, is probably the most dangerous thing you can do. The information to do the research is at your finger tips.
The 2/22 DGS Letter has been issued and has some sector list with some new entries. It is available in no charge subscription by email to "email@example.com".
Good Luck All,