Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Four Bull Views on the Market...and Four Bear Views

By

It's all in how you look at it.

PrintPRINT
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

MINYANVILLE ORIGINAL

That cotton trade was almost the deal breaker for me. It was at that point that I said, "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?"

-- Paul Tudor Jones

Another start of the week, another stalemate! Here are some arguments for a move higher:
  1. Many sentiment indicators are oversold and this is a contrarian indicator, signifying a higher market bent. (The recent tepid move has eroded some of the benefits of being oversold, but overall the intermediate term indicators are oversold.)
  1. Most averages are at important technical support levels. I shared a few days ago how S&P was balancing at its 200 day EMA, and it found support at that crucial level.
  1. The housing index has enjoyed spectacular gains during the last week. It's important to pay attention to the leaders of the recent move from October.
  1. Market reacts the least to the outcomes it expects the most. Could it be that the omniscient market has already seen ahead of the feared events and shrugged?
On the other hand, the same situation can be viewed in a negative light:
  1. This decline has been extremely contained, especially when put in context of underlying emotions. As I shared on May 23, there has been no serious selling day leading to capitulation in this entire decline.
  1. When a market falls and is unable to rally hard despite oversold conditions, it can be construed as a sign of further decline to come.
  1. Some of the oversold market condition has been "used up" since the market has rallied for the past few days. Some of the indexes have actually run right into resistance. See the below chart of Russell 2000 (^RUT), for instance.


    Click to enlarge
  1. The volume on the ascend has been nothing remarkable.
The way I see it, the market remains in a muddled state and seems to have no edge on either side. This is the same pattern of a relief bounce that occurred last Monday. It's hard to make logical decisions in the face of emotional responses stemming from possible binary events. Thus, I am keeping commitment small in terms of size and time horizon.
< Previous
  • 1
Next >
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.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE