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.

Is the Cyclical Bull on Its Last Legs?

By

If weakened internals fail to get back in sync with the market, that would give us something to worry about.

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


Even though one might blame it on a "keyboard malfunction," the charts are now reflecting yesterday's reality. The oversold conditions have become quite pronounced. That might offer nimble traders opportunities, but the combination of global uncertainties after a significant decline might not bode well for intermediate-term longs.

If I were allowed to voice only one concern, it would be the sudden appearance of four 90% downside days so close to new highs! The last time that occurred in a bull market was in July and August 2007. Even though the markets managed to climb back over the course of the next few weeks (key indexes even made their highs in Oct 2007), the market internals were never really able to recover from that onslaught.

That begs the question: Is the cyclical bull on its last legs?

The clues to look for in the intermediate term: The quality of the bounce becomes very important to monitor. If weakened internals fail to get back in sync with the market, that would give us something to worry about.

The takeaway in the short term: After a major negative event, it's usually very hard for markets (and people) to carry on as if nothing has happened. That can lead to more emotional meltdowns along the way (nothing like yesterday, though). I'd stay away from the most popular individual names. The market indexes usually fare better in choppy declines compared to stocks. If one is looking for an upside edge, then individual names help; if looking for protection and safety, indexes usually provide that. Right after small position size.
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