Dow Watch: Transports on the Move
But a short-term pullback for the broader Dow.
Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community.
The markets now seem breathless. Two of my many indicators are advising short-term rest for the market.
Percentage of stocks above 10 day moving average = 94
- S&P Short Range Oscillator = 7.6
The Oscillator has congregated in negative territory for long periods during this bear market; it's symptomatic of just how brutal it's been, especially when contrasted with bull markets, where a day or 2 of oversold readings leads to a snapback rally.
However, it hasn't been able to stay in the extended positive territory for too long (again, unlike bull markets, where such action is only indicative of strength).
Now that we're in wildly extended readings, I would expect a pullback. (option expiration today complicates that picture). As I have shared many times before, I think it's going to be a garden-variety pullback and nothing virulent, since this market has shown exceptional strength. More can be known only if and when the pullback occurs.
And for those who are keeping a track with me, Dow Transports had its eighth day in the green yesterday. Of course, there's no law that says indexes can't behave in a certain way (here's hoping I didn't give our lawmakers any ideas), but this is the first time since the average broke down in September 2008 that it's been up for 8 straight days.
Again, short-term exhaustion is possible - but there is proof of underlying strength.
Click to enlarge
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.
Daily Recap Newsletter