At times like this, it's easy to get lost in the day-to-day market nuttiness, and I've found it's sometimes helpful to take a step back away from the one-minute charts and look at the big picture. So today we'll start off with the old reliable NYSE Composite
(INDEXDJX:NYA). NYA is a great representation of the broad market, since it contains all the common stocks on the New York Stock Exchange -- and it often tells a different story than the big-cap indices like the Dow Jones
(INDEXDJX:.DJI) and S&P 500
It's very interesting to note that NYA has still not made a new all-time-high. The chart below is a weekly chart, and the notes contain most of my thoughts. Just glancing at the chart, the main thing that jumps out is how quickly and effortlessly NYA plummeted back in 2008, versus how it has seemingly struggled to regain that ground. This is especially noteworthy given the massive Fed money pumping that's occurred during the past five years. The picture suggests that the fits-and-starts nature of the rally is caused by the fact that it's a correction to the last decline -- one of the ideas behind Elliott Wave analysis is that the market struggles when moving against the larger trend.
Click to enlarge
The Philadelphia Bank Index
(INDEXDJX:BKX) continues to lag. So far, this isn't doing much to sell me on this rally as anything that will have legs for SPX.
Click to enlarge
Even if this rally is going to become an impulse and make a new all-time-high, it looks like it's very close to being a complete structure. As I've noted previously, the main bullish hopes would lie in the idea that when this five-wave fractal completes, it will make up wave (i) of a still larger five-wave fractal. Given NYA and BKX, I currently have to view that bullish option as lower probability.
Click to enlarge
In conclusion, I do not presently believe this is the start of a nosebleed rally -- to the contrary (while I think it's entirely possible SPX will push on to another high), I still believe the market is in a topping phase. Trade safe.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.