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I was really struggling to come up with a different way to say the same thing - until I read the latest in the Gazette. Toddo has taken the environment and wrapped his pea shooting arms around it. The semi's get upgraded and proceed to get spanked. Why - because as Toddo suggests there is a game of hot potato going on among the only people that even are bothering to watch. The various indicators I look at are no longer oversold on the daily basis and are not oversold enough on the weekly basis to drag in those waiting on the sidelines.

In order to have a meaningful and sustainable rally, you need more buyers vs. a lack of sellers. More buyers and real interest mean that when there is a pause in the upside, there is a scramble to find the stocks that may move the most on the next leg higher. That scramble is clearly not taking place. The funniest aspect of the most recent long-term run (two days) is when people interviewed in the media (like myself) try to put a spin on a really simple thing.

The market didn't rally, in my humble opinion, because there is greater comfort regarding Iraq. If anything, Blix, the UN and the White House response has created more confusion about the whole issue instead of less. The market didn't tank on that because after a four-week drop with a big event (Blix's report), anyone who wanted to sell had already done so and the shorts didn't want to press it and began to lessen their bet. So there you have it; limited selling and some short covering creates the appearance of strength.

As Toddo points out, that big run up is coming, but suggesting that Thursday was the beginning would be pure guesswork because nothing has changed; valuations remain high (rates haven't helped valuations for two years so don't expect them too now), the economy remains sluggish, the geo-political backdrop is even more confusing than it was a week ago and the intermediate-term indicators have not become extreme enough on the downside to bring in buyers with high conviction levels.

Watch what Toddo writes, that is the first place to look for the ramp when it happens. That insight is the difference in me now vs. three years ago - back then I had no way of knowing what was happening on a daily basis. Now I do, and can use it in the longer-term view.
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