• 752 days Will The ECB Continue To Hike Rates?
  • 753 days Forbes: Aramco Remains Largest Company In The Middle East
  • 754 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,154 days Could Crypto Overtake Traditional Investment?
  • 1,159 days Americans Still Quitting Jobs At Record Pace
  • 1,161 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,164 days Is The Dollar Too Strong?
  • 1,164 days Big Tech Disappoints Investors on Earnings Calls
  • 1,165 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,167 days China Is Quietly Trying To Distance Itself From Russia
  • 1,167 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,171 days Crypto Investors Won Big In 2021
  • 1,171 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,172 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,174 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,175 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,178 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,179 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,179 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,181 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Stock Barometer

Stock Barometer

Stock Barometer

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend. Our goal is to…

Contact Author

  1. Home
  2. Markets
  3. Other

The Morning After

7/11/2014 6:01:07 AM

Good morning Traders,

As we've seen with this market advance, the market remains resilient. When a large gap lower is recovered mostly during the trading day, that's a sign of lack of follow through to the downside, and more buyers than sellers.

But periodically it is also a warning sign. The key is follow through. There is still a lot of bearish positioning in the market, which means traders expect downside, and the crowd is normally wrong. That being said, let's look at where people's minds are at...

AAII % Bulls minus Percent Bears Chart

This divergence between you individual traders and us newsletter writers isn't that significant - but the key is we're working off an overly bullish period.

Another sentiment measure is quickly moving to fear, which is bullish, more often than not. Rarely will the market tank when traders position for it. The market machine needs complacency to sell off.

Equity Put/Call Ratio Chart

And finally, one precursor to a sell off is the characteristic that the Nasdaq is weaker than the NYSE. And we're seeing that again, as the internals are very weak on the Nasdaq.

QQQ versus SPY Relative Strength Spread Chart

So while the conditions exist for selling, the rampant positioning for a sell off (shorting, buying puts) suggests to me that the market will hang up for at least another week.

Regards,

 

Back to homepage

Leave a comment

Leave a comment