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Daily Pictures

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I have to make today's commentary short and sweet because I am going to be a guest on Bloomberg Radio from 9-10am (if you are not in the tri-state area www.bloomberg.com and then click "radio" icon). I have spent so much time outlining the intermediate-term (weekly) outlook for the markets that I thought it might be nice to go through some of the near-term (daily) pictures.

Basically, what I see is the same thing across the board; all the indices are into resistance, have been unable to push forward and have lost their momentum (Exhibits 1-3). Does that mean the whole market is about to crash? - no, there needs to be motivated sellers for that. What it does mean to me is that until the intermediate-term picture changes or some of the issues underlying the market change as outlined yesterday, then it is difficult to trust that "it will be different" this time and buyers are going to be able to push stocks sustainably higher without any compelling fundamental, technical or geo-political reason.

In general I do believe the equity market is close from a timing standpoint to an intermediate-term low and therefore am looking long into any drop vs. looking short for a drop. One of the factors that is beginning to enter the picture again, as Toddo mentioned a few times this week, is asset allocation switches out of bonds and into stocks. Behind this chatter has been the drop in the 10-year Note yield to the bottom of the recent trading range (Exhibit 4). A move below this range would likely cause yields to at least retest their October lows. Clearly that would be caused by some event and provide a new reason for buyers to step in as talk of asset allocation switches would dominate the trading floor buzz.

Again, rather than guess that buyers are about to step in, lets wait for some evidence. So far there still isn't much.

Exhibit 1 - The DJIA is failing at resistance and lost momentum

Exhibit 2 - The SPX shows the same

Exhibit 3 - I hope you didn't think the NAZ would be any different

Exhibit 4 - Asset allocation chatter picking up with the drop in yields

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No matter how you slice it, this environment is miserable and I can't wait until it is over. That time is coming soon IMHO.
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