When the rest of the world says sell, it’s time to buy. Last week’s email we called for a little respite of the bulls, but we held you hands and told you everything was going to be alright., despite the Chicken Littles running around warning that the sky is falling.
Market sentiment is still too high for a panic type sell off. Here’s the numbers for the week.
My little chart that I put together is broke right now because of the Labor Day Holiday. So I posted this one this week. Notice that all the Major Indices were down about 1% on the week with the Nasdaq 100 the strongest (we issued a buy signal on Tuesday) and the Small Caps being the weakest. The Dow showed considerable strength.
Tuesday’s selloff was very frightening. If you listened to CNBC and the Doug Kass updates you would all be convinced that the market was going into free fall. I lost some faith in my little pullback call from the Weekly newsletter and dug into more research and published this post for our members: [ you need to join!]
Which line is longer? Left or Right?
I think it is worth the read. If anyone knows how to get it to Doug Kass it might save him some $$$$$.
Eventually Doug will be right, as we continue to make higher highs here we will do so on lower and lower sentiment data and then bombs away. We are just not there yet. Soon maybe.
I confirmed with some of my other friends this weekend what they were seeing.
Our 52 Week New Highs:
If you were in the room on Thursday you would have know that by 11:00 am we were calling for a buy signal back into the market. We could tell via the 52 week new highs that were beginning to pile on that our 5 day momo indicator was going to turn at the end of the day. On Friday we were issuing very bullish New High reports all day. The Rut was troubling us but we knew if the Rut A/D could reach positive the market would light up.
We issue a new high report every 1/2 hour on our twitter feed.. which has moved now to http://twitter/redsdata. Robot postings on my regular twitter account http://twitter.com/redliontrader was lowering my search score so I needed to move it. This week we have added a score that ranges from 4+ to 4- to help interpret the NYSE data. You can read about the updated format at: http://www.redliontrader.com/2009/09/how-to-interpret-new-high-data.html
The Week Ahead.
The way is cleared now to retest and make new highs. Watch our postings on the NYSE new highs to see if we make new index highs on lower 52 week highs, this is the kind of weakening we are looking for. Today we were trapped without trading and the world went into in rally mode. As I write this late Monday afternoon the abbreviated futures market is closed and the YM (dow) and ES (sp-500) are up quite large. ES is up 7.75 over Friday’s close and YM is up 62 points. That certainly has trapped some bears, the question on tomorrow’s open is who is more afraid.. t
a) those that have ended with a free windfall gift of trading and afraid of loosing the profits,
b) or the bears afraid that the stampede is in a full run again.
We will watch the open tomorrow, I would expect a sell-off at the open and then a return to the highs. Much will be said about trading rooms back to full staff, it should be fun. I fully expect to make new highs this week although each new high should be harder and less difference from the last. If sentiment remains as strong as it is now without loosing steam during this week than Doug Kass better cover and wait it means we have a long ways to go.
See you in the markets
Marlin Cobb – aka Redliontrader
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