DELL's earnings Thursday night caused the breakdown on the indexes Friday, dropping the Nasdaq by as much as 1.5% intraday. Volume rose on the nasdaq, albeit less than 5%, and dipped on the NYSE. This gave the Nasdaq its third distribution day in past four weeks. While the distribution days have not been climatic selloffs, they are selling stocks none-the-less.
More stocks became casualites in the blow-up category (ie, IPII) and few charts are presenting good buy opportunities. It remains time to keep cash heavy and wait the market out till it decides to make up its mind.
Without a doubt, oil is being linked as the cause for this. I will tell you this, if the market looks ahead by six months, the market is telling us oil at $80 is coming. If the current price action has to deal with the "current" move in oil, then history has folded its hand on its past historical guidance of oil prices and market movements. Which does not surprise me, since there have been so many crazy things that have bucked recent history. Interest Rates not rising on the long end while Greenspan hiked rates is the first to come to mind. But that was due to low inflation--without food, lodging, and oil. Wonder what inflation is going to look like 6 months from now?
The markets are still in a downtrend on the short-term and sub-intermediate trends and up on the long-term and intermediate trends. However, a few more days of distribution, to go along with all of my ugly charts will confirm that we could soon be in for an intermediate correction.
One other item of interest: I did not report Thursday night something that caught my attention. The Investors Intelligent Survey of Newsletter writers shows 59% Bulls and 19% Bears. These two numbers are at extremes and to see people get more bullish the past week as prices drop confirms that there is too much bullishness out there and not enough fear.
If you go back to the April/May bottom and read my blog comments you will see that I saw this pattern IN REVERSE. So while everyone stays bullish at these levels, I remain extremely cautious. Better to be safe and alive, than sorry and broke.
New Swing Longs: BE CAREFUL WITH NEW BREAKOUTS: MDG AAPL NVDA
Longs Outperforming Market: RCCC ASEI CPTV SVR NFLX WHR
New Swing Shorts: CNTF CTHR WPSC CKCM LB TRMM FMD CREE
Small Stocks To Watch: INT WEX ITWO JAMS TAGS CVV OPTC
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