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Apples and . . . .


Well that clears it up!! . . .not


A couple of weeks ago a Minyan asked me where I'd start legging into longs if I believed that the market was going to make a stand at the SPX 1170-76. Since we don't do advice in the 'Ville, I simply offered that if I believed that those levels would hold, I'd be inclined to wait for a retest before stepping up to the plate. Well the retest is here. If you look at a daily of the SPY, Thursday looked very much like a repeat of April 29. On April 30 the market found a quick low and turned north into a nice bull run. Is this time different? I don't know, but there are some differences between then and now.

  • First, at the end of April the 10yr. Treasury was already rallying strongly. Now, it's just broken down.

  • Second, we are now seeing a very a high number of huge volume implosions in individual names, which I do not recall back in April. The following tickers have had eye-popping crashes: ITT, SKX, LIZ, KCI, CAI, APCC, DRIV, IVC, PPDI, FHRX, LPNT, USPI, DLX GR, ORCT, BVN, CNC, DRTK, CBI, ACLS, POT, TSAI, KBAY - and these happened just yesterday!

  • Third, in April the 200DMA was clearly upsloping and was recaptured after the first low. Today the 200DMA is flat and has not been threatened on a closing basis since early October.

  • Fourth, the rally early this week left the stochastics in a less favorable position than they were at April's retest lows.

  • The critical element that does remain the same, courtesy of our Iron Horse, is the strong tone of corporate bonds.

Minyans start your engines!

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Positions in ITT, DRTK
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