Featured Blog Posts – October 2009 Archive (4)

Today's intraday reversal in the equities markets follows a pattern that has been established of late of selling into rallies. Key support levels have been broken to the downside and without a late day recovery a close below those levels will likely usher in a significant pullback.



The dollar has also broken out of its descending wedge pattern. I was observing that the dollar was not selling off on the significant early strength in equities and was instead starting to push higher. I… Continue

The RUT:INDU Ratio chart shows that internal breadth has narrowed dramatically in the last two weeks of earnings season. The rally is being supported by a few big cap names (represented by the 30 DOW stocks in INDU) while interest in the broad market (represented by the 2000 stocks in the Russell 2000 Small Cap Index) has declined sharply. This is a dramatic contrast with earlier stages of the rally. Caution is warranted.…

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Here's a favorite market aphorism that helps me stay on the right side of the market:



"When a market doesn't do what it's supposed to do when it's supposed to do it then it may be about to do the exact opposite in a big way"



Well, the action in the market over the last two weeks of earnings season fits the above description. Today's intraday reversal was a big yellow flag. I am not calling "the top" or suggesting that we get short but I am putting out the caution… Continue

After a shallow and brief pullback the markets have broken out again.…

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