Today’s run confirmed that yesterday was a well- [or not too well] set short-term bottom. The financial stocks that strongly indicated a possibility of a top back in May led the way today with 7.6% run in $BKX.
Here you can see how it all happened: stagnation in April, strong divergence in May and jump out of the window today. Probably the 20% drop of Fannie and Freddie was a good signal of a bottom as well.
The real bear trap was that yesterday VXO (and VIX) did not set any panic level that could be good for a bottom:
Compare with 31 in November, which was the closest to yesterday’s levels. Otherwise I would cover everything, because most of the other indicators were bottomish.
This indicator was well below November lows.
This one as well. And another useful chart:
Those who are subscribed to the Wall Street Examiner Professional Edition know that the bottom just set was a 13-week bottom, not a major one. The big 6-month bottom is coming in August/September and will be saluted with VIX in the 35-40 area. Back in November the counter-rally was not very powerful and the next top was set in early December. The coming top, possibly as soon as this month, should provide some very juicy shorting opportunities.
You’ve probably noticed that I’m not talking about any fundamentals in this post about charts. This is because in the short run the stock market doesn’t care much about fundamentals and doesn’t discount anything. Only 200 day moving averages are smart, stocks are stupid.
I’ll be on vacation next week. I’ll read all comments and posts of my favorite blogs from my cellphone, but I won’t be able to write anything. Windows mobile is just not capable of that kind of interface.
6 Comments
We’ll see.
Another premature bottom call.
You have A LOT of company on this.
I suspect the REAL trough will be marked by skepticism and base building rather than a huge out of the blue rally.
Well well! I had a feeling that rally yesterday was a mile wide and an inch deep. All the big winners yesterday got clobbered today. Those ultra bear ETFs — you love ‘em or you hate ‘em.
That said, who knows what will happen tomorrow. Fasten those seat belts.
base building
I gotta think many people are losing at least some of their appetite for stocks. This isn’t your grandma’s stock market.
you said that in the wall street professional edition that it said it was a bottom…i think he said it might be!!!!
>>> you said that in the wall street professional edition that it said it was a bottom…i think he said it might be!!!!
I apologize for very bad wording!
In fact I meant that WSE stated that we are HEADING into 13-week bottom but not 6-month bottom.
But WSE said nothing about if the bottom is set or not yet.
Apologies!
I was calling the May top about 3 days before it happened. I could be wrong again by 3 days. That’s my destiny - premature stock ejaculation :-)))
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