The major indexes all finished down, again, today. Breath was very poor and volume rose heavily across the board, giving the markets yet another distribution day.
The good news behind this was the oversold bounce we got with about one hour left in the day. This oversold bounce helped relieve the downtrend of aggressive selling pressure, which gives comfort that the bulls can bounce this for a day or two.
But besides that little ray of light, there is nothing else shining out there. Inflation and the Fed going strongly after it and the asset bubble in the housing market is not a good recipe for stocks. So once again keep raising cash and dont be aggressive with any long side trades until the market has given a clear signal the downtrend is over. And just by looking at all the charts out there that have been taken out the past week and the few strong charts that are in decent sectors, I come to the conclusion that a bottom is nowhere near at these levels.
At the same time I am hearing people talk of a "crash" coming. Nope. Sorry. It is not going to happen.
There is too much program trading happening in the stock market to allow that sort of thing to happen. Besides that is the simple fact that stocks are still basically cheap. Unless P/E ratio's start to contract--P/E of SP500 is 18--there is no way a crash is going to happen with stocks this cheap. I believe back in 1987 the SP P/E ratio was around 28 or so. That kind of froth mixed with the current technical situation of then indexes could lead to a crash. But at these levels, I TRUELY DOUBT IT. Also is the fact everyone is talking about a crash. Crashes happen when no one is ready for it. So "Black Monday" probably is not going to happen. LOL.
New Swing Longs: FDG BAB NEM LWSN SYS
Longs Outperforming Market: IRIS AAI SYKE PEP
New Swing Shorts: CHKP CIB GPRO SJT VCP WLS LUFK PETM ADI BJ
Shorts Outperforming the Market: AMHC MTH VLCCF KNXA JRCC EVVV TOL WCG
Small Stocks On Radar Screen: SA
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